Workers and revolution in Serbia: From Tito to Miloševic and beyond 9781526112514

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Workers and revolution in Serbia From Tito to Milošević and beyond

Martin Upchurch • Darko Marinković

Workers and revolution in Serbia

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Workers and revolution in Serbia From Tito to Milošević and beyond Martin Upchurch and Darko Marinković

Manchester University Press Manchester and New York distributed in the United States exclusively by Palgrave Macmillan

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Copyright © Martin Upchurch and Darko Marinković 2013 The rights of Martin Upchurch and Darko Marinković to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. Published by Manchester University Press Oxford Road, Manchester M13 9NR, UK and Room 400, 175 Fifth Avenue, New York, NY 10010, USA www.manchesteruniversitypress.co.uk Distributed in the United States exclusively by Palgrave Macmillan, 175 Fifth Avenue, New York, NY 10010, USA Distributed in Canada exclusively by UBC Press, University of British Columbia, 2029 West Mall, Vancouver, BC, Canada V6T 1Z2 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data applied for

ISBN 978 0 7190 8508 6 hardback First published 2013 The publisher has no responsibility for the persistence or accuracy of URLs for any external or third-party internet websites referred to in this book, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

Typeset by SPi Publisher Services, Pondicherry, India

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Contents

List of tables Acknowledgements 1

Introduction

page vi vii 1

2 The Tito years

17

3

Serbia in the world economy

40

4

Neo-liberalism imposed

69

5 The workers’ movement

89

6

Serbia’s new period of crisis

118

Serbia timeline

131

References

133

Index

147

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Tables

2.1 3.1 3.2 3.3 5.1

Number of strikes in Yugoslavia, 1980–88 page 32 Selected economic indicators: Western Balkans 54 Gross domestic product (GDP), Serbia 2000–10 56 Trade balances 58 Rate growth of GDP and industry production in Serbia (1989–2000) 101 5.2a Trade union activists’ perceptions of self-management in Serbia (n = 23) 110 5.2b Managers’ perceptions of self-management in Serbia (n = 18) 111

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Acknowledgements

This short book is dedicated to the brave workers of 5 October 2000 and to their hopes for a better life. The research for the book, including interviews with trade union leaders and workers, has been made possible with a grant from the British Academy. Interviews took place with a number of trade union activists and officials in Serbia during the period from 2003 to 2010. The authors are also grateful to participants at a Round Table held in Belgrade on ‘The Problems of Social Dialogue’ in 2008, and to student members of the Masters programme run by the European Center for Peace and Development in Belgrade, Novi Pazar, Podgorica and Novi Sad.

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1

Introduction

Our purpose in writing this book is to record the centrality of the workers’ movement in shaping the past, present and future of Serbia. It was not until 1987 that Slobodan Milošević came to prominence within the Yugoslavian political elite. During that year, Milošević was sent by the League of Communists to help quell rebellious Serbs in Kosovo, but rather than decry any nationalist feelings, he sought to present himself as ‘defender of the Serbs’ in a move calculated to generate a pro-nationalist image for himself within Serbia, and in doing so rose to the pinnacle of power within the League of Communists within Serbia. The path to nationalist war and the break-up of Yugoslavia had begun. However, within this Yugoslav tragedy, we are interested in Serbia in particular for three specific reasons. First, under Tito, Yugoslavia was celebrated by many as something special within the Communist sphere. This special nature derived from its programme of self-management of enterprises developed within the country in the aftermath of the Tito–Stalin split of 1948. Many on the left heralded the experiment as true socialism in the making, a distinct alternative to the authoritarian and bureaucratic nature of the Soviet system. We are therefore interested in reviewing the reality of self-management from the perspective of ordinary workers and assessing the legacy, if any, that it has provided. Second, Serbia was central to the nationalist wars of the 1990s. It suffered the indignity of sanctions and NATO bombardment. How did this then affect the consciousness of the mass of workers? What was the capacity of nationalist ideology in deflecting workers from a focus on combating the employers in everyday class struggle? We find such questions of extreme importance, given that for many of the pre-war years, Yugoslavia had experienced a general upturn in worker combativity, later effectively destroyed by Milošević’s appeal to nationalism, which returned again to dog the regime in the late 1990s. Third, we hope to show that workers’ power, expressed through strikes, demonstrations and blockades, was central to the overthrow of the despised Milošević regime in October 2000. The Revolution of 5 October, as all revolutions do, created its own legends

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of resistance and triumph. Most notable in the case of Serbia was the charge of the wheel loader on parliament, symbolically giving rise to the tag of the ‘Bulldozer Revolution’. It is this centrality of workers’ resistance, led by the striking miners of Kolubara, that also makes Serbia a worthy case study of transformation. More so than any of the revolutions and uprisings in 1989 against Communism, we find in Serbia that the workers’ movement and collective action was central to events. This leads us to our final question, how have the hopes and aspirations of ordinary people been met within the new Serbia? The curtain opens We have to go further back for two decades to begin to understand the struggles which eventually exploded in the Communist world. The central role of ordinary people in expressing their opposition to Communist authority is the key to our understanding. The rise of organised workers and their revolt against the system began with the birth of Polish Solidarnoşc in the early 1980s. The struggle of Solidarnoşc heralded a process of fundamental change, as the Soviet Union and the ‘People’s Democracies’ struggled to find their place in the global economy. Economic struggles combined with political demands. The process of globalisation of the world economy, beginning as a response to declining Western capital profitability in the late 1960s, was inevitably associated with a reformation and restructuring of the international division of labour. Where were the former command economies to situate themselves within this new order? How would the power of Western multinational capital, simultaneously expressed through the international financial institutions (IFIs) and trade organisations, manifest itself within these new market arenas? For Yugoslavia, would a full-scale entry into the global economic order mean a strategy built on capital- or labour-intensive production? Such uncertainties were bound to create instabilities and conflict, which, some decades on, have continued inexplorably not only through the upheavals in Yugoslavia in the 1990s and new millenium but also to the hitherto unpredicted stage of North Africa and the Middle East as the ‘Arab Spring’ began to unfold. The uncertainties are compounded by increases in income inequality, persistence of poverty and, in the aftermath of the 2008 financial crash, a new era of austerity. Such conflict that has arisen, rather than signify the ‘end of history’, might better be described as the ‘revenge of history’ as the repressed and oppressed fight back against their oppressors (Callinicos, 1991). In Serbia, as in both Tunisia and Egypt, as Alexander (2010) graphically illustrates, we find the revolution was also part of a longer process, set within a rising tide of workers’ organisation and disputes. One central feature, of

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3

course, in all the upheaval is the common desire of ordinary people for freedom of expression, political democracy, personal liberation and a better future. Yet, in Serbia, we find the October 2000 Revolution has disintegrated into an orgy of private rent-seeking, combined with immiseration of workers’ living standards and an expansion of crime, corruption and the informal economy. In this book, we place much of the blame for these outcomes firmly in the hands of those neo-liberal ‘reformers’ who sought to convince us that their particular path of ‘doing business’ was the best for all. We discern no ‘trickle down’ of wealth, no redistributive impetus for the benefit of society and no sense of societal solidarity. Things have got worse not better for the majority of ordinary people. How then can we learn lessons from this? How can we prevent the spirit, energy and bravery of the people against the tyrants and dictators from being wasted? Last but not least, are such political revolutions for freedom and democracy a mere precursor of more fundamental societal change? 5 October 2000, Belgrade On 5 October 2000 in Belgrade, the people of Serbia rose up against the rule of Slobodan Milošević and his Socialist Party regime. The parliament building in the centre of the city was stormed by the crowd. Demands for democracy were fuelled by the government’s unwillingness to recognise its defeat in the 24 September presidential election. Hundreds of thousands of people demonstrated in the capital that day, with convoys of trucks and lorries travelling from major towns and cities across Serbia. The largest convoy of 200 lorries, 40 buses and other heavy vehicles came from Čačak and was 20 km long. The convoy was led by its mayor, Velimir Ilić, and smashed through police barricades to reach the centre of Belgrade. When it arrived, the convoy’s members played a leading role in the storming of the federal parliament. The crisis began on 27 September, when the Federal Electoral Commission, against all available evidence, declared that the main opposition candidate, Vojislav Koštunica, had failed to gain 50 per cent of the vote. A second round of elections was called, and in response the Democratic Party called for a general strike on 2 October in protest. Secondary school pupils and students from Otpor! (Resistance) were the first to head for the streets, and momentum soon gathered in their path.1 Formed by students in Belgrade University in autumn 1998, Otpor! had undoubtedly shaped the political debate within Serbia, creating, as Gamson (1990: 15) postulates in social movement theory, an ‘injustice frame’ from which mobilisation and resistance could move forward. Their actions included signing petitions, distributing leaflets and organising rallies and workshops, as well as street performance, which were often used to ridicule

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the regime (Nedadic and Belcevic, 2006). But while Otpor! could mobilise ordinary citizens onto the streets and in the universities, it was clear that the mood for change was also driven from below by ordinary people and workers. Indeed, we argue here that it was the power of workers in halting production and closing down power supplies that was the most crucial element of the revolution’s success. On 29 September, a general strike of 7,500 workers from the Kolubara mine complex began, coal from which produced the majority of Serbia’s energy needs. This was to be a loaded weapon in the hands of the masses. The workers’ demands were both economic and political, with a call for full recognition of the general election results. The state’s ‘official’ union condemned the strike, but other, newly independent unions agitated in their support. The ruling regime responded by intimidation through court procedures and by sending to the head of the Yugoslav army, General Pavković, to Kolubara to threaten conscription of the striking miners. The miners continued to resist, and workers across the country turned the Kolubara strike into a beacon from which to launch a more fundamental protest. They were soon joined by workers at the oil refinery in Pancevo, while copper workers at Sevojno drew up plans for further strike action. A killer blow was the decision of the 4,500 miners at the Kostolac pit, nearby to Kolubara, who decided to join the strike in solidarity. The regime was thus faced with a spreading general strike, which threatened very quickly to close down Serbia’s power supplies. The crisis peaked on 5 October when Zoran Djindjić of the Democratic Party was emboldened to call for a mass demonstration in Belgrade and for Milošević to step down by 3 pm that day. One poignant moment of this ‘Bulldozer Revolution’ was the charge that day by a construction worker with his wheel loader at the state-owned television building. The building was set on fire and three floors were gutted, while some of the despised journalists and editors were beaten up and thrown out into the street. During the reign of Milošević, the media had remained loyal to the mendacity of the state elite, and the worker’s individual protest symbolised the desire of ordinary people to transform their country after years of war, sanctions, NATO bombing, economic austerity and authoritarian politics. The dramatic nature of the storming of parliament together with the wheel loader charge marked a high point of workers’ frustration. There had been many anti-government demonstrations before, but nothing seemed to change. As the driver of the wheel loader, an unemployed construction worker named Ljubisav (‘Jo’) Djokić explained in a post-revolution interview ‘I have been protesting for ten years. I used to go to all the rallies. I would get beaten, swallow lots of teargas and then come back home without achieving anything… . I thought hard this time and decided that I would be more successful if I took my bulldozer with me… . The police fired

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5

bullets at me, I protected myself by raising my bucket. In the end, my bulldozer forced open the door of the state television building and I shouted to the protesters that the TV is free and everyone rushed in’.2 Popular protest against the government had been transformed into a revolution with the aim of regime change and hope for a better future. The mass of working people in Serbia felt that the regime was at its end and were prepared to take the risk of one great push against Milošević without fear of the consequences of failure. The protestors could no longer be ignored or beaten back into submission. When the radio and TV station fell to the masses, pro-democracy journalists and broadcasters took centre stage, while leading officials of the ruling Socialist Party resigned from their position. On 6 October, Milošević appeared on television to admit defeat, and on the following day he resigned. The revolution had succeeded, and a new coalition government was formed under the presidency of Vojislav Koštunica. What sort of revolution? The build-up to a revolutionary upheaval is often only evident in hindsight, and the spark which sets off the revolution is unpredictable and more often than not begins as a defensive reaction to a sense of betrayal or aggression by the ruling elite. It is also, as Lenin observed, most likely when the ruling elite are divided amongst themselves over future strategy, in a state of paralysis over what to do next. These ingredients, with the necessary knowledge of hindsight, were certainly evident in the case of Serbia during the year 2000. In July 2000, Milošević amended the Constitution of Yugoslavia to give him six more years as president. In the aftermath of the failure of the civil wars, NATO sanctions and bombardment, this was a test of loyalty from the masses that he assumed he would have no trouble passing. The renewed Constitution included a clause that the president of Yugoslavia, now only Serbia and Montenegro, would be elected directly by the people rather than be appointed by consent from federal units as before. Milošević had carefully secured the support of the Socialist Party and its allies in Serbia and Montenegro for the change and anticipated standing that summer for election to the presidency without effective opposition. Elections were called by Milošević on 27 July, for the Yugoslav Parliament, the local government and the presidency itself. It appeared that he was certain to win; the opposition was weak and he began to step up the pressure on the members of Otpor! by a steady campaign of police harassment and beatings. This was perhaps his first mistake, as he did not anticipate the negative public reaction to the oppression, which, as Bujosević and Radovanović (2003: 3) express, was encapsulated in the phrase ‘If he’s beating children, he must be powerless’. The media was also suppressed as

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he took over the municipal television and radio operator, Studio B, and prevented the opposition from having access to electronic media. His old Stalinist instincts remained strong, but they clashed with the new everyday expectations of a people emerging from the ravages of nationalist war and anxious for a better future. The doubts over the honesty and integrity of the ruling regime allowed some political opportunity for the opposition parties to regroup. They were aided and abetted by the Otpor! campaign which had given expression to dissatisfaction with mass leafleting, paint spraying and slogans sung at Red Star Belgrade football matches such as ‘Slobodan kill yourself and save Serbia’ (Bujosević and Radovanović, 2003: 4). In doing so, the campaign developed some ‘cognitive liberation’, which, as McAdam (1982) has argued, is a necessary prerequisite for social mobilisation. The eighteen parties of the Democratic Opposition of Serbia (DOS) rallied around Vojislav Koštunica as presidential candidate, and for the first time, the prospect of defeat for Milošević was apparent. When the election took place on 24 September, the impending deluge of condemnation against Milošević could still not have been predicted. The storm started just three hours after the closure of polling booths when the district court magistrate in Niš handed in his resignation, suspicious that some ballot papers were hidden and that Milošević was about to rig the results. Aware that he had been defeated in the polls, Milošević pulled a last trick, arguing that there was no clear winner and that a run-off was necessary. This was a trick tried once before in 1996, and the mass of people clearly remembered the trickery but this time had developed the confidence to say No! That evening, 20,000 demonstrated in Terazije Square in Belgrade, and the dice had begun to tumble. The centre of the vote rigging appeared to be in Kosovo, where 100,000 extra votes had appeared, with 145,000 being counted contrary to reports from within the Socialist Party that only 45,000 had voted in the province. Of course, the 100,000 were declared for Milošević and his party. In the light of these revelations, and fuelled by demonstrations of public discontent, Koštunica declared that he would not enter a new election, that he had won and that Milošević should resign. Zoran Djindjić, of the Democratic Party, called for a general strike on the following Monday, and the miners of Kolubara were the first to respond to the call. The ensuing revolutionary uprising was not a spontaneous affair. It was assumed that the main provincial cities of Novi Sad, Čačak and Niš would go over to Kostunica and his allies. The problem would be Belgrade and the seat of real power. Detailed planning went into the construction of a road map which would end with a showdown at the federal parliament on the appointed day of 5 October. The DOS, led by Djindjić and his allies with the support of General Perisić, the former chief of staff of the Yugoslav army and then head of the Movement for a Democratic Serbia, began preparations

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7

to mobilise the mass of people in a demonstration outside the federal buildings, while local activists and members of Otpor! gathered their comrades in towns and cities and prepared transport to ferry their supporters for the big day in Belgrade. This would consist of a series of converging convoys designed to scatter police operations and weaken their ability to contain the forces physically. Once the centre of Belgrade was occupied, the second stage of the plan was to defend the occupation from outside attack, and then to complete the final move to enter the parliament buildings, force Milošević to resign and declare a Koštunica-led new government. The convoy plan seemed to work well; the police appeared overstretched in their ability to prevent the large convoys entering Belgrade at its outskirts, and more often than not, with just minor altercation, the convoys swept through the road barriers and on to the city centre. However, while the DOS and Otpor! succeeded in mobilising the mass of people, the fate of the Kolubara strike was less certain. Milošević clearly understood that while he might be able to withstand a mass demonstration, he could not simultaneously cope with a general strike that had the capacity to switch off the electric lights across the country. What happened at Kolubara, therefore, might well decide his fate. Aware of the danger, Milošević first passed a decree ordering the Serbian power utilities to maintain levels of production necessary to ensure power supplies. Somewhat bizarrely, considering the need of Milošević to keep the miners actually working, police were then sent and dissident miners were thrown out of the pit, and a strike of all miners immediately followed. Supporters then flooded to the pits, including Kostunica, to offer solidarity. But should the police evict the strikers, or should they try to enable especially recruited strike-breakers to enter the pits? The order from General Stevanović of military command was to move the miners from the morning shift out of the mine at any cost (Bujosević and Radovanović, 2003: 18). But faced with the real choice on the ground, the local police chief, Buha, preferred a ‘softly softly’ approach and tried to reason with the miners instead. He had noticed small holes in the fences surrounding the mine and so quietly struck a deal with the miners that they should be seen to leave so that Buha could satisfy his superiors, but then he would turn a blind eye if they wanted to get back to the mine through the holes in the fence! This the miners promptly did, as supporters burst through the police barricade to reach the mine. To the outside world, it looked as if the police had only half done the job, but Buha was satisfied that he had fulfilled his orders. Of course, unbeknown to the authorities, the miners before leaving the mine had demobilised all the essential equipment, and no strike-breaker could have restarted production anyway. But the Kolubara miners had survived the crisis, and Milošević’s fate was sealed.

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Workers and revolution in Serbia

The use of the police and military by Milošević raises another question. Why were the protestors or the miners not physically suppressed? The idea of maximum force against the miners had come from Milošević himself, and the order passed down the military command. But at local level, no police officer was prepared to pull the trigger, either fearful of the consequences of retaliation or simply because they thought the order was the last wish of a doomed man and wished to disassociate themselves from the victim. The police had easily been outmanoeuvred on the barricades approaching the city, and at the storming of the parliament building many police had to be protected by the revolutionaries from severe retribution from more aggressive elements in the crowd. Clearly, the police were outfought, outnumbered and outmanoeuvred, but what is interesting is the lack of intervention from the military with boots on the ground. Instead, the troops stayed in their barracks, even though the generals played lip service to Milošević with placatory gestures and words. First and foremost, the DOS claimed that they had never given an order either for the attack on parliament or for the parliament buildings to be set on fire (Bujosević and Radovanović, 2003: 105). The initiative came from below, as the excitement of the hour infected the spirits and enthusiasm of the demonstrators. The revolution developed its own dynamic, and the sheer scale of events took not only the DOS but also the government and its spies by surprise. Given this dynamic, the top military made an assessment to switch sides rather than attack the demonstrators. Games were played with Milošević with a knife hidden in one pocket ready, if necessary, to stab him in the back. The game play was consolidated in secret talks between Djindjić and the chief of the Special Operations Units, and between Koštunica and the head of the commander of the anti-terrorist units, who were all apparently clear that they could ‘do business’ with one another. Some of these contacts took place without the knowledge of superiors, and one suspects that rumour fed rumour and a situation soon developed whereby military and security leaders began to adopt positions and take sides, either pro-Milošević or pro-Koštunica. This is a classic scenario of a divided ruling elite, in which paralysis ensues and the course of history is left to the masses, willing or not to take power. Such game play would ensure some sort of smooth transition of power if that became necessary – a transition of power that would ensure the continuation of the military command, that would protect private property and that would ensure the security of Serbia in the outside world. For the military and its new political friends, there was to be no Ceauşescu solution, no firing squad and, if at all possible, no workers’ power over the forces of capital. Milošević instead was escorted away from power by means of a small visitation to his house, and then all the way to face justice at The Hague.

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Introduction

9 A mass revolutionary strike?

The heady interaction of economics and politics in the revolution spurred by the workers’ movement and strikes appear to confirm the revolutionary chemistry portrayed by Rosa Luxemburg almost a century earlier in the Mass Strike (1906). Luxemburg was reflecting on events in 1905 Russia and focused her thoughts on the interplay between economic demands and political demands whereby: Every new onset and every fresh victory of the political struggle is transformed into a powerful impetus for the economic struggle, extending at the same time its external possibilities and intensifying the inner urge of the workers to better their position and their desire to struggle. After every foaming wave of political action a fructifying deposit remains behind from which a thousand stalks of economic struggle shoot forth. And conversely. The workers’ condition of ceaseless economic struggle with the capitalists keeps their fighting energy alive in every political interval; it forms, so to speak, the permanent fresh reservoir of the strength of the proletarian classes, from which the political fight ever renews its strength, and at the same time leads the indefatigable economic sappers of the proletariat at all times, now here and now there, to isolated sharp conflicts, out of which public conflicts on a large scale unexpectedly explode.3

Indeed, it seemed that Serbia in 2000 was following the path of Luxemburg’s analysis, with economic demands transgressing into political demands and vice versa. This was much more like a ‘real’ revolution, involving protest, strikes, bravery and insurrectionary activity, than was the case with the East European revolutions of 1989. The Kolubara workers demanded first economic improvements to their terms and conditions, but then political demands of democracy and an end to the Milošević regime. The two sets of demands became intertwined, not least because of the actions of Milošević to repress their right of expression. However, we cannot claim that the mass of workers demanded a social revolution in the classic Bolshevik mode which would act to overturn property relations, destroy the power of the state and move forward to construct a socialist society. No organised force or party expressed such demands, despite the anti-capitalist flavour of Otpor! Rather, they wanted regime change through political revolution, a rejection of the one-party Stalinist state model and an end to a decade of isolation and increasing immiseration. The majority point of reference for those holding power, as in all the earlier 1989 upheavals, was not a return to the classical socialism of Marx but rather a turn to the West and its ‘values’ of liberal democracy and prosperity through the market economy (Callinicos, 1991: 59–60). The road map to this supposed liberal democratic nirvana in Serbia remained unclear.

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Workers and revolution in Serbia

In the immediate aftermath of the revolution, Collins (2001: 225) recorded, ‘So many questions were still unanswered … how could Serbia construct a genuinely equitable society, repair its shattered economy, reform its corrupt civic institutions, reconcile itself to its bloody past and peacefully resolve its disputes in Kosovo and Montenegro? Could the opposition alliance hold together … [and] Slobodan Milošević: would he ever face trial for his crimes?’ Such a confusion and array of hopes and aspirations in Serbia is reminiscent of the Arab Spring of 2011, the fall of Ben Ali in Tunisia and Mubarak in Egypt, and the search for a new democracy fought for in the face of resistance from the old guard and its military. But for ordinary workers, there also remained the central question of economic justice, not just in terms of income distribution but also in terms of workplace justice against their Serbian Socialist Party bosses. This was posed acutely in Serbia, where workers’ action held the key to change and where workers themselves had suffered enormously from the lost decade of civil war, sanctions and debt. For the leadership of the newly independent unions, the goal was full integration into the social democratic heartlands of western Europe, while for the rump of the old ‘official’ union, the key aspiration appeared to be to hold on to some of the vestiges of past authority, sprinkled on occasion with cries of Serbian nationalism. Despite these ideological and practical differences within the workers’ movement, the strikes continued alongside occupations and workplace sit-ins in a form of revengeful guerrilla warfare against the state and employers. Many disputes arose whose purpose has been described by Marinković (2001) to allow ‘freedom of organisation, elimination of harassment of trade union activists and fraud and robbery of the enterprise assets by management’. In many cases, this meant the ejection of management cadre and the re-election of new ones (ironically a semi-legitimate practice following the legacy of Yugoslav self-management). In the Smederevo steel plants, for example, which employed 11,000 workers, a strike was threatened unless the manager resigned. In the state-run textile Nitex factory in Niš, workers demanded the management be fired, and in Belgrade workers attacked the head of Genex, Serbia’s largest state-run import–export operation, who then resigned (Živković and German, 2000). Other disputes focused on non-payment or freezing of wages, or job losses under privatisation. The wave of protest and mobilisation which brought down Milošević thus continued for a period at least. The new regime In the event, the new regime, with Koštunica as president of the Federation of Yugoslavia and Djindjić as prime minister of Serbia (in reality the more powerful position), sailed an unsteady course between the demands of the

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11

EU for social dialogue, Serbian nationalism and, under pressure from the international financial institutions (IFIs), a thoroughly neo-liberal programme of privatisation and marketisation. Djindjić, born in Bosnia, was a long-term dissident from the Tito years, exiled in West Germany and protected initially by Willy Brandt before finally returning to Belgrade in 1989 to help found the Democratic Party. While in exile in West Germany, he studied under Jürgen Habermas in Frankfurt and no doubt learnt from him the dialectic of interplay between politics and economics. He came to prominence in 1996 in the earlier demonstrations against vote rigging and thus had the necessary street credibility to head the new movement for change. His position of power allowed him the opportunity to gain retribution against Milošević by arranging for his transfer to The Hague Tribunal in 2001 in the face of opposition from Koštunica and Serbian nationalists. He was presented as pro-Western both because of his technocratic behaviour and his neo-liberal persuasions. As Grubačić (2010: 58) suggests: ‘there emerged a so-called Belgrade consensus – a convergence of the neoliberal and nationalistic political elite and intellectual commissars who were restoring the capacity of coercion against the people who tried to look beyond only options of nationalism and neoliberalism’. His assassination on 12 March 2003 followed his political marginalisation of Koštunica a few weeks earlier as Yugoslavia was ‘converted’ into Serbia and Montenegro. Most potently, the shrouded circumstances of his death highlighted the prevalence of organised crime within the minefield of Serbian politics, run by elites with dubious connections. Koštunica followed as prime minister of Serbia after the December 2003 parliamentary elections. He, too, had been a dissident and lost his job as professor of law at Belgrade University in 1974 for criticising Tito. As prime minister, he has continued neo-liberal policies internally, and externally he has tried to square the circle between potential EU accession, handing over alleged war criminals and holding on to Kosovo as a part of Serbia. He sat from 2004 until 2012 alongside Boris Tadić, a psychologist by profession and leader of the Democratic Party. In the 2012 presidential elections, Tadić won the first round but was beaten in the second round by Tomislav Nicolić of the Serbian Progressive Party. Twelve candidates stood for president representing more than twenty separate parties, some in coalition behind one candidate. Nicolić has a radical nationalist history and was former deputy prime minister to Milošević. Although avowedly pro-Russian, his initial speeches affirmed a commitment to keeping Serbia on track for EU accession. His surprise victory over Tadić was variously attributed to a relatively low electoral turnout (45 per cent), a softening of his nationalist stance and a turn towards addressing the economic difficulties of the country.

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Workers and revolution in Serbia

Indeed, his electoral victory may be framed in a populist appeal to the fact that twelve years on from the revolution, many of the aspirations of workers and ordinary people in Serbia appear unfulfilled. Privatisation and state reform have left hundreds of thousands without jobs and with lower pensions and welfare support. Progress on individual freedom and the right to travel has been made, but political gangsterism persists, and Serbia is edging only very slowly to EU accession, as disputes over war criminals and nationhood remain. The trade unions remain fragmented, weakened and divided, with much potential associative power in a weak civil society, but with little structural power as the Serbian economy fails to stabilise or find its place in the global economy. In attempting to unravel and unpick these dilemmas, we utilise two perspectives. First, we borrow from social movement theory perspectives and frameworks which help throw light on the ebb and flow of protest. Most conventional analyses of labour under post-Communism present a picture of labour weakness and industrial quiescence based either on structural or agency factors. We thus present an alternative dimension, returning to classic studies of labour as a protest movement rooted in particularised political economies. Protest movements do not develop in a linear fashion. Rather they are subject to cycles of contention, in which opportunities for protest arise and new movements from below may be facilitated or repressed by ruling authorities. Second, we analyse the workers’ movement within the context and understanding of other post-Communist labour movements. In doing so, we need to appreciate the legacy of Communism, the weakness of labour that may have arisen as a result of that legacy and the potentially debilitating effects of postCommunist clientelism on trade union independence. In effect, we argue that after the first upward wave of contention, beginning with Solidarnoşc in the early 1980s, similar patterns of development within the workers’ movements occurred. First, a contentious struggle for economic and political demands, which then receded in a downward wave as unions sought collaborative solutions and struggle, was institutionalised in fragile shells of corporatism. A new upward wave of contention against the injustices of neo-liberalism, marketisation and privatisation is now discernible, faltering in content due to the legacies of collaboration and political fragmentation. But discernible, nevertheless. Milošević and beyond: the scope of the book The purpose of this book is also to try to explain the dynamic of the workers’ movement during and after the 5 October Revolution and to provide understanding as to why the expectations of those making the revolution

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remain unfulfilled. As such, historical context is all important, and the Serbian case needs to be described in some detail. We first need to analyse the position of workers under Yugoslav socialism, before placing the context of workers’ action more generally in the process of transformation from the form of Communism existing in eastern Europe up to 1989 and its specific variation in Milošević’s Serbia. We examine in chapter 2 the character of Yugoslavia during the Tito period and refer in particular to the development of self-management and the political split between Tito and Stalin. We suggest that while the partisans engaged in struggle ‘from below’ had bravely created their own state, remnants of Stalinist command authority ‘from above’ acted to corrupt the search for a workers’ state. We also note that rather than consolidate workers’ socialist consciousness, self-management instead pulled Yugoslavia more and more towards the market, and the market in turn corrupted self-management in practice. Not only that, but a distinct class divide emerged in the process, producing a self-management class consolidating Communist Party rule from above. Having outlined the role and situation of workers in Titoist Yugoslavia, we return to the core material of our book. In contrast to Central and East European countries, following the fall of the Berlin Wall, the process of economic, political and social reforms took on a different dynamic and produced different results in Serbia. In many ways, we are dealing with a special case, where workers’ action was intermingled and affected by nationalism, war and isolation. As such, the story told here may stand in some isolation from the more general story of post-Communist transformation in central and eastern Europe. So instead of reforms to improve the standard and quality of life, we find that at crucial times division, nationalism, wars, the break-up of the country, organised crime and the black market ensued. It was the producer strata of society that paid for the consequences. Serbia became the victim of nationalism, and its own negative historical legacy accumulated over decades. Milošević was the only leader of the former Communist states who, instead of withdrawing, dared to try and strengthen his authority through party rule. But despite his attempted manipulation of the will of ordinary people, the strength of nationalist feeling gradually declined, while workers, increasingly squeezed by sanctions and by poverty, openly raised the question of jobs, bread and the future of their children. From within this rising discontent grew the social force that finally broke through in the revolutionary events of 5 October 2000. Milošević departed from power, but his ideas did not automatically disappear. After 5 October, the process of social and economic reforms was opened. The expectations of the citizens were left unrealised. The spectres of high unemployment, low pay, organised crime and corruption remained. Part and parcel of this reality were weak, divided trade unions, at war with one another.

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Workers and revolution in Serbia

To help understand this dialectical interplay between economy and society, in chapter 3 we examine the economic background to the fall of Yugoslavia. We give an overview of the economy of Yugoslavia leading up to the civil wars and then track developments through the break-up of Yugoslavia and the post-Milošević period. The hypothesis that the high level of debt was a key factor in the break-up of the country is examined. The position of the Serbian economy vis-à-vis the rest of the Western Balkans is described in terms of patterns of trade, development and FDI. From this, we can determine that debt, and the servicing of debt repayments, has continued to drive economic policy in Serbia. The question of debt and the neo-liberal conditions attached to allowing such debt are the focus of our analysis. Particular attention is paid in chapter 4 to the influence of the IFIs on the decision-making process in Serbia. We take time to analyse the role of IFIs in shaping policy within Serbia, most notably in terms of privatisation, public sector retrenchment and reform of labour codes. The impact of the burgeoning informal economy within the labour market is explored, not only in terms of its linkages with poverty, crime and corruption but also in terms of its deleterious effects on the development of human and social capital. Our analysis concludes that rather than Serbia’s economic and social problems being a product of ‘blocked reforms’, a better understanding can be gleaned by viewing society through the lens of uneven and combined development, whereby the old sits alongside the new and ‘dysfunctional’ practices such as corruption and disregard for the rule of law are integral to the transformation dynamic. Chapter 5 examines the nature of trade unions and other workers’ organisations both in the former Yugoslavia and in Serbia after the fall of Milošević. We frame our story by first examining the problems of workers’ movements in general in post-Communism. The nature of the ‘official’ unions under the Milošević regime is then contrasted with the development of ‘independent’ unions in the period leading up to the October 2000 Revolution. The role of the alternative trade union federations in the new Serbia is then analysed, and their strategic options are explored. The interaction of unions with the political process is examined, and the position of workers and the representation of their interests within Serbia are described. It is here that we critique the collaborationist and clientelist nature of the union movement. The legacy, or rather non-legacy, of workers’ selfmanagement on workers’ organisations and consciousness is then explored. We next analyse the influence of the workers’ movement on events in post-revolution Serbia – a society in conflict. At the start of the transitional process, industrial disputes remain at centre stage. At the same time, these industrial conflicts show that the nationalist manipulation was of limited effectiveness, growing weaker over time. Even after being silenced by the

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nationalist and war policy from 1992, there were important strikes. However, by the late 1990s, the locus of conflict shifted to the state utilities. In this period, there were a growing number of strikes with a political character whereby economic demands were mixed with demands for political democracy and regime change. The reason for this was that the earlier experience of strikes taught the workers that the struggle for the everyday interests of wages and job security was pointless in the given economic context. As a result, workers’ demands were radicalised and politicised, and workers themselves assumed a central role in the fall of the regime. Our method in addressing the character of the workers’ movement is to eschew a path-dependency/path-shaping approach most common in analyses of labour and industrial relations under post-Communism. Instead, we appreciate the dialectic between structure and agency, between path dependency and path shaping. Most importantly, it is here that we recognise the importance of studying labour as a movement in itself, drawing on social movement theory to assess the balance of forces within successive cycles of contention. Finally, in chapter 6, we examine how the workers’ movement has fared in fulfilling its expectations within post-revolution Serbia. Having been a central cog of the revolutionary process, we find that workers and their unions have since been disarmed by a number of factors. The process of transformation in countries of central and eastern Europe (CEE) and newly independent states (NIS) of the former Soviet Union has often been accompanied by efforts to establish forms of social dialogue between government, employers and trade unions. The same has been the case in Serbia and the other new states of the former Yugoslavia. Attempts to establish mechanisms of social dialogue have been made to encourage social stability in a period of rapid structural change, to meet demands for a ‘voice’ from trade unions and to legitimise state strategies. Social dialogue has also been a central feature of EU attempts to nurture states for accession and has been a feature of ‘institution building’ programmes of IFIs. The social dialogue process has been fraught with difficulties, not least the societal divisions created by neo-liberal restructuring and the weakness of the peak organisations of organised labour and employers. In many instances, social dialogue has appeared ‘shell-like’ with frame but little real content. Alternative scenarios for the future are then given, both optimistic and pessimistic. Research for the book was undertaken with financial assistance from the British Academy. Data was collected from trade unions, the World Bank, IMF and government documents. Interviews were conducted with trade union leaders and activists, employers and state officials, and this data was supplemented with a specially convened round-table forum conducted in Belgrade in 2007.

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Workers and revolution in Serbia Notes

1 Otpor! was founded in 1998 and, while important in the October 2000 Revolution, has since faced criticism for accepting substantial funding from USAID and other US-based agencies. In August 2003, the organisation formed its own political party and later entered the Democratic Party (see Nedadic and Belcevic, 2006, for a detailed account). Ilic (2000) also suggests that rather than being an open, populist movement, Otpor! exhibited tendencies towards elitist methods with decisions taken by a relatively secluded group of leaders within a hierarchical structure. Other commentators, however, may differ in their assessment. 2 Recorded 17 October 2000 in a report by Dragana Nikolić for the Institute for War and Peace Reporting, www.iwpr.net/?p=bcr&s=f&o=246717&apc_state= henibcrfc196a24943d743ebc956b40f2051b1a accessed 26 February 2009. 3 www.marxists.org/archive/luxemburg/1906/mass-strike/ch04.htm.

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2

The Tito years

No story of the workers’ movement in Serbia can be explained without understanding the character of Yugoslavia under the presidency of Josip Broz Tito.1 This dramatic period in Yugoslavia’s post-war formation is of great historical interest not only because of the split between Tito and Stalin but also because of the ‘revolution from below’ and the ensuing experiment in workers’ self-management. These three historical events mark a qualitative difference between the experience of Yugoslavia and that of other communist states, and so there is added interest in assessing the legacy of the difference on workers’ consciousness, expectations and repertoires of action. The three endogenous differences were interlinked as Yugoslav independence from the Stalinist Bloc was characterised not only by the variance from the command economy but also by openness to the West. We begin to explore the interplay of these forces through the lens of workers’ everyday experience. First, we analyse the causes and consequences of the Tito–Stalin split. Second, we assess the character of communist Yugoslavia as it was forged by Tito and the partisans. We then move on to examine the experience of everyday working life under the Titoist regime and focus on the debates surrounding the establishment of self-management through the vehicle of workers’ councils. We present an argument that the experiment in self-management was a modernisation project designed by the Yugoslav state leadership to raise the consciousness of the peasant to that of the modern industrial worker. However, the project was infected with the Stalinist control orthodoxy from which Tito and the Titoists never departed and was also conceived as a vehicle for instilling worker discipline in which a clear class divide was apparent within the enterprise. In later years, Yugoslavia’s turn to the market corrupted self-management even further, to the extent that its legacy among workers, if one existed at all, was at best neutral and at worst negative.

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Workers and revolution in Serbia Tito and the partisans

The formation of modern Yugoslavia, the federation of the Slavs of the South, was a testament to the success of Tito’s communist partisans in defeating the Axis occupation during World War Two (WW2). Yugoslavia had only existed as a full and sovereign nation since 1918, having been born out of the Treaty of Versailles at the end of World War One. WW2, however, shattered the peaceful settlement of the previous years as Yugoslavia fell prey to the forces of ethno-nationalism, royalism and fascism as well as communism. From the 1930s, Tito had successfully begun the task of building a communist movement, but in March 1941 Yugoslavia fell to the Axis and was divided under occupation from German, Italian and Bulgarian troops. Between 1941 and 1944, until the Soviet Red Army crossed into Yugoslavia, Tito had conducted an insurrectionary partisan war against the occupation. He drew support from across Yugoslavia by building a mainly peasant-based army which at various times controlled significant parts of the country. The partisan divisions were eventually formed into a People’s Liberation Army which simultaneously fought the occupation and a civil war against representatives of the pre-WW2 ‘old order’ and royalist Yugoslavia. The victory of the partisans was undoubtedly aided by Tito’s alliance with Churchill against the Nazis.2 This alliance was formed once Churchill was convinced that Tito and his partisans had a better chance of success in defeating the Axis than that presented to him by the Royalists led by the Serbian nationalist leader Draža Mihailović. Similar fighting partisan movements led by communists were active in France, Northern Italy, Albania, Greece, Bulgaria and Slovakia. But while the Greek and Italian movements were crushed at the end of the war by the Allies, the Yugoslavs were left alone due to the terms of the private ‘percentages’ agreement struck between Churchill and Stalin in Moscow in 1944.3 This agreement was confirmed with Roosevelt at Yalta in 1945, whereby Yugoslavia, Albania and Bulgaria were deemed to fall in the Soviet sphere of influence while Greece and Italy fell within the Western sphere. The fate of the French communists was more complicated; initially they became part of the post-war coalition government under de Gaulle but were then evicted from government as pre-condition for US Marshall Aid. The character of the Yugoslavia re-created by Tito was embryonic within the ‘liberated’ areas from March 1941 to October 1944. Tito emphasised the necessity of establishing the communist movement as a popular front ‘from below’ in order to maximise its potential numbers and maintain a committed fighting force. In the liberated areas ‘… the old order was overthrown and a new popular administration constructed around liberation committees ... a hierarchy of committees would control a whole town or

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territory, complete with postal service, health service, and publicly controlled industry’ (Swain and Swain, 1993: 17–18). The National Anti-Fascist Liberation Council comprised elected representatives from both the liberated territories and underground organisations in occupied land. At the higher echelons at least, the representative bodies were dominated by the communists, giving them effective political control. In June 1944, the British government honoured its pledge and recognised Tito’s communist government. In February 1945, Tito agreed to merge his government with the government-in-exile, thus winning the generalised approval of the Allies who gave full recognition to Tito in March 1945. However, the communists under Tito dominated the new government, giving him confidence to repress counter-revolutionary forces and hold elections in November 1945. The communists and their close allies within the People’s Front went on to receive 90 per cent of the votes in an 88.7 per cent turnout (Swain and Swain, 1993: 26–7). Nationalisation of the main industries was consolidated as a central part of the communist plan, and by 1947, 82 per cent of the country was under state control, including the banking system, wholesale trade, transportation and agriculture (Sturmthal, 1964). Tito and Stalin The second part of the story of the foundation of Tito’s Yugoslavia concerns the political relationship between Tito and the Soviet Union under Stalin. The early relationship was positive, as between 1939 and 1941 Tito ran a credible underground organisation which received the approval of Stalin. The Stalin–Hitler Pact was in play, and Stalin had calculated at the time that a strong communist movement in the Balkans would be left alone by Hitler. The Comintern, in a left turn, was also mindful of the defeat of the Left in the Spanish Civil War. The defeat of the republican forces was attributed by Stalin to the ‘mistaken’ creation of a popular front ‘from above’ of the communists allied with socialists and with bourgeois partners further to the right. Tito’s contrasting approach, of building a front ‘from below’ with maximum participation of the communists and their allies, appeared a more credible strategy to pursue. However, with the collapse of the Nazi– Soviet Pact, Stalin changed course and sought to build alliances with the Western powers to defeat Hitler. In doing so, the notion of revolution from below was likely to upset Soviet calculations and lose the sympathy of the Allies. Most crucially, Stalin’s alliance with Western powers restored the credibility in the Soviet’s perspective of working with, rather than against bourgeois forces. From this point on, it was inevitable that tension arose between Stalin’s foreign policy and the nature of Tito’s campaign. After the end of the war, the tensions appeared to be contained, and Tito was

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Workers and revolution in Serbia

partially rewarded by Stalin with the establishment of the Cominform (the International Communist Information Bureau) headquarters in Yugoslavia in September 1947. However, the developing split on Balkan policy between Stalin and Tito was a major reason for the subsequent expulsion of Yugoslavia from the Cominform in July 1948. In particular, Tito’s advances towards the building of a wide-ranging Balkan Socialist Federation across the region clashed with British interests in Greece. The concept of such a federation was a long-held tradition of the Balkan socialist movement (Živković, 2003: 2–12), and Tito felt confident in attempting to press home such a project. He visited both Bulgaria and Romania in 1947 and convinced Dimitrov in Bulgaria of the need to change tactics and build a united front based on insurrectionary ideals. Stalin, however, opposed such a federation built through revolutionary communism and preferred instead a more limited federation comprising Bulgaria, Yugoslavia and Albania that would be both acceptable to the Allies and, more importantly, subservient to the Soviet Union. Such a federation was to be based on alliances between communists and others in a national popular front created without the necessity of revolutionary upheaval. Stalin’s strategy was essentially to seek alliances between the communists and social democratic parties and to encourage the social democratic parties to fuse with the communists. This strategy was adopted, or rather imposed, in the former East Germany and also in Hungary, where the Communist Party was weaker than in most of the other Balkan states. The final split over policy in the Balkans came in January 1948 when Tito stationed troops in Albania to provide help to the communist partisans fighting in Greece. Stalin, of course, had already promised the Allies that he would not support the fight for a Greek communist government, and so this break of ‘discipline’ by Tito was a move too far. Stalin then insisted that the Yugoslav communists should surrender foreign policy initiatives (including in the Balkans) to the Soviet Union. Following negotiations between Stalin and Yugoslavia’s emissary Milovan Ðilas in Moscow, the Central Committee of the Yugoslav Communist Party rejected Stalin’s proposal on 1 March 1948.4 In so doing, it effectively isolated itself from the Soviet Bloc. However, the ‘ex-communication’ of Tito’s Yugoslavia from the Soviet Bloc had implications beyond foreign policy in the Balkans. Tito and his partisans had conducted a successful insurrection against the occupation forces and had mobilised mass support for his objectives of a new Yugoslavian state. Tito himself contrasted this communism ‘from below’ with the contemporary Soviet Union under Stalin and began to consolidate his position in ideological terms with reference to this contrast. Most importantly, he characterised the Soviet Union in terms of an unhealthy relationship between party and state whereby ‘… the Party in the Soviet

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Union is becoming more and more bureaucratic and is growing to be part and parcel of the bureaucratic state apparatus, becoming identified with it, and simply a part of it’ (Tito, 1950: 14). Furthermore, this Stalinist bureaucratic ossification was holding back the course of socialism which should be characterised by the ‘withering away of the state’ in its classic Marxist– Leninist formation. The Soviet Union, according to this analysis, while remaining a socialist country under Stalin, had developed a bureaucratic leadership which had lost its socialist direction. Ðilas, the Montenegrin vice president of the Republic and one of the key intellectuals of the Yugoslav Communist Party, went even further than Tito in his critique of the USSR. He denounced the Soviet Union as ‘state capitalist’, inferring a counter-revolution had taken place under Stalin within the socialist motherland (Swain and Swain, 1993: 73). Of course, such ‘heresy’ was denounced by Stalin and the associated Communist Party hierarchies. The headquarters of the Cominform were hurriedly transferred by Stalin from Belgrade to Bucharest, and in June 1948 the Cominform denounced the activities and ideology of the Yugoslav Communist Party as being incompatible with Marxism–Leninism. Tito and his regime were then denounced as bourgeois nationalists and a fascist clique in the Cominform journal a year later. Leading Communist Party writers joined in the attacks. The British communist James Klugmann and the French communist Pierre Hervé contemporaneously published books entitled From Trotsky to Tito, the claim of linkage with Trotsky being the ultimate heresy. Klugmann, somewhat ironically given the recency of the Stalinist purges and executions, recorded that Tito’s Communist Party ‘had no normal internal life, there was no political discussion, so no MarxistLeninist criticism, and self-criticism, the leaders were not elected, but chosen’ (Klugmann, 1951: 13). In orchestrating such attacks, Stalin was not simply worried about Tito as a rival pole of communist authority but had real concerns for the future stability of his loyal foreign Communist Party adherents. Within the Soviet Bloc, he launched a new series of purges against suspected Tito sympathisers in subservient communist parties. Kostov, General Secretary of the Bulgarian Communist Party, was executed, alongside Slansky, Czechoslovak General Secretary, and Clementis, the Czech Foreign Minister. In Poland, General Secretary Gomulka was removed from office. As Birchall (1974: 49) notes, ‘The trials that took place showed contempt for elementary legal procedure second only to that of the Moscow trials of the 1930s. Many of those purged had long records as militants: many, moreover, had been devoted hack-writers of anti-Tito tirades.’ While Stalin exercised full control within his satellites, the Tito–Stalin argument still threatened to split the communist movement outside of the rigidly controlled Soviet Bloc. In the Western-based parties, there was clearly more

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personal opportunity (in the absence of the threat of execution or state trial) to express support for Tito, and consequently there was a real danger of party splits. There was also the danger to Stalin, with his policy of smoothing alliances with social democracy, that social democratic parties such as the British Labour Party of the French Socialist Party might side with Tito against Stalin and the Soviet Union. Purges of suspected ‘Titoists’ by loyal Stalinist CP central committees in the West soon followed. In France, members of the Communist Party (PCF) who spent holidays in Yugoslavia were expelled, while militants were disciplined for attending the France–Yugoslavia football match (Birchall, 1974: 50). Party members were also expelled from the Italian, German and Norwegian parties. However, as Birchall records (1974: 51), ‘Eventually the anti-Tito campaign succeeded in isolating the virus... . Tito’s revolt was essentially bureaucratic, and he had no intention of setting up an alternative International’. Besides, now isolated from the Soviet Bloc, he needed the support of foreign social democratic parties and could not afford to isolate himself further. It was not just the Stalinist parties that were in turmoil because of Tito. The small and fragmented Trotskyist groups were also thrown into heated debate. This debate focused on the efficacy of the Tito regime as a revolutionary workers’ alternative to the Stalinist bureaucratised states. The anti-Stalin position postulated by Tito and leading intellectuals in the Yugoslav CP appeared to coincide with Trotsky’s own analysis before he was assassinated – of the Soviet Union as a ‘degenerated workers’ state’. Furthermore, Tito and the partisans had built their new state ‘from below’ in contrast to the revolutions ‘from above’ as was the case in the majority of the satellite states in eastern Europe. Most importantly, the introduction of workers’ self-management in 1950 carried the gloss of workers’ control over the means of production. For many ‘orthodox’ Trotskyists, the events in Yugoslavia in 1948 and after appeared to provide an opportunity to influence the course of socialism through a rejection of Stalinism and a welcome embrace of Titoism. Leading theoreticians of the Trotskyist ‘Fourth International’, such as Ernest Mandel and G. Bloch, gave support to Tito’s initiatives. Others, such as Pierre Lambert of the French Partie Communiste Internationale (a post-war Trotskyist organisation with an estimated 1,000 members), even helped to organise trade union volunteer work brigades to Yugoslavia. However, praise for Tito was by no means unanimous among Trotskyists. Natalya Trotsky, the widow of Trotsky, withdrew her support for the Fourth International over the issue. Writing to the leadership of the American Socialist Workers Party and the Fourth International from Mexico in 1951, she criticises support for the Stalinist bureaucracies in eastern Europe and elsewhere and refers in particular to

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an ‘inexcusable idealisation of the Titoist bureaucracy’.5 The late 1940s was also the time when heterodox Trotskyist analysis emanating from the forerunners of the British International Socialists (later Socialist Workers Party) sought to characterise the Soviet Union as state capitalist, whereby Stalin’s counter-revolution had transformed the bureaucratic elite into a ruling class with interests distinct from an exploited working class. Exploitation of the working class flowed from the subordination of the economy to capital accumulation as the Soviet Union sought to compete militarily with the West (Cliff, 1964). Post-1948 Yugoslavia, according to Cliff, was no different to the other Stalinist ‘People’s Democracies’. As such, Tito and the Yugoslav Communist Party did not mark a break from Stalinism. Despite this, Cliff argued at the time that it was necessary for the revolutionary left to defend Tito’s Yugoslavia against Stalin’s imperialist aggression (Cliff, 1950). Tito and the Yugoslavian Communist Party had clearly opened up a Pandora’s box of ideological cleavage and uncertainty within the international left. Given such theoretical and practical turmoil, how can we analyse the position of workers within Titoist Yugoslavia? The life and times of workers under Tito To begin the analysis, we must summarise the economic and social nature of the Tito insurrection and place it within the context of Yugoslavia’s circumstances at the end of WW2. To do this, it needs to be remembered that the Tito partisans were fighting a war for national liberation above all else. The primary objective was to rid Yugoslavia of the occupying forces. As such, it was by necessity first and foremost a military campaign of a majority peasant-based army and only secondly a project to build a workers’ state. In the ‘liberated’ areas of 1941–44, the role and function of the liberation committees was firstly to secure their defence and secondly to establish internal economic, political and social order. The National Liberation Council declared in 1942 at its first meeting in Bihach inter alia ‘The inviolability of private property and the providing of every possibility for individual initiative in industry, trade and agriculture’ (cited from Cliff, 1950 in Hallas ed., 1971). Factories and production facilities were certainly seized from the occupying powers ‘from below’ but by military means and were taken into state ownership ex post facto rather than as a process flowing from workers’ occupation and factory insurrection. All foreign-owned companies in the occupied territories had been commandeered by the Nazis, and company ownership in these instances was automatically assumed by the state. These, together with factories seized from the local bourgeoisie, then amounted to the vast majority of industrial

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concerns. We must also consider that the economic and social structure in Yugoslavia at the time of the insurrection militated against the successful immediate establishment of a fully fledged workers’ state under workers’ control of the means of production. In a country of 17 million people, no more than half a million were estimated to be production workers in industry. Yugoslavia in 1945 was a predominantly peasant-based country with little industry, riven by poverty and devastated by the war. Nationalist (Croatian, Serbian, Albanian, etc.) and royalist sentiments were much in evidence. Tito had simultaneously conducted a civil war against such elements by building a concept of ‘Yugoslav’ nationalism, but needed still to secure Communist Party authority against these potential ‘counterrevolutionary’ elements. His method for dealing with these problems was to replicate the Stalinist formula of ensuring communist authority by repression of dissent and coercion. Dissenters within the workers’ movement (including returned POUM members from the Spanish Civil War) were labelled ‘Trotsky-Fascists’ and subject to trial at the peoples’ court, sometimes ending in death.6 In fact, Tito had always been a loyal disciple of Stalin when he was building the Yugoslav Communist Party from the 1930s on. He became general secretary of the Yugoslav CP in 1937, at the height of the Moscow Trials, and his government after 1945 was built on solidly Stalinist principles of one-party rule, ‘socialism in one country’, and the deliberate development of a leader-cult. Modern-day Podgorica in Montenegro, for example, spent the years named as Titograd. Indeed, Tito’s enthusiasm for Stalin and his methods was replicated by the Yugoslav Communist Party which supported ‘Every action of the Soviet Government – for example the attack on Finland – and every unpleasant feature in the Soviet Union – for example, the trials and purges …’ (Ðilas, 1969: 14). Given the Stalinist inclinations of Tito and the Communist Party leadership, it should not be surprising that, despite the split with Stalin and the Soviet Union, the economic and political programme of the government followed the Stalinist command model. In 1949, the process of collectivisation of agriculture was begun, a massive investment in heavy industry was planned and the system was regulated by direct central administration. Ministries determined output and prices in a drive towards capital accumulation over consumption. The rigid command structure of the partisan army had been carried over into everyday life and social organisation. In the process, a privileged nomenklatura was confirmed (graphically described by Ðilas in 1957 in The New Class.) Workers, in contrast, were expected to work hard for the workers’ state and obey the authority of the Communist Party and its ‘official’ trade union. As was common in other Stalinist states, there was no legal ‘right’ to strike in the Constitution. Of course, the contradictions between a professed anti-Stalinism of the Titoist leadership and

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the reality of continuing Stalinist method were not without intellectual implications. Most notably, the Praxis Group centred in Zagreb and led by Mihailo Marković and others sought to introduce a humanistic Marxism into the Yugoslav political discourse. Their work offered a critique of what they termed ‘Leninist’ Marxism associated with the League of Communists and offered a seemingly more dialectical approach taken from the works of Gramsci and Lúkacs among others. The group was active from 1963 until being forced to close down operations and summer schools within Yugoslavia in 1975 (see Marković and Cohen, 1975). Self-management A defining feature of Tito’s Yugoslavia is the experiment in workers’ self-management of the enterprise. Self-management and its associated workers’ councils appeared for many on the left a beacon of socialist form in contrast to the bureaucratic method of Stalinism. Thus, in the 1950s and 1960s, the international left debated self-management in detail. The experiment, while in progress, then attracted scores of academic articles in the 1970s and 1980s, seeking to analyse the content of self-management and the social relations of production inherent in workers’ councils (see Singh et al. (2007) for the most recent literature review). Most notably, writers focused their attention either on how socialist the experiment was or alternatively what lessons might be drawn from experiments in industrial democracy in the West. The macro- and micro-economic implications of self-management have also been raked over, primarily to assess any inter-linkage between the decline of self-management and the economic demise of Yugoslavia. It has been argued, for example, that workers were encouraged under self-management to pursue their vested interest in increasing pay and in so doing to undermine the efficiency of the wider economy (Zukin, 1975). This was the argument put in an article in The Washington Post by the former economic advisers to Yugoslavia in the 1980s, Jeffrey Sachs and David Lipton: ‘… the workers inevitably have tried to swallow up profits in the form of high wage payments, lighter workloads, and other forms of hidden compensation’(Sachs and Lipton, 1989).7 Writing in Atlantic Monthly as early as 1962, Fred Warner Neal had also forewarned that workers’ councils, by negating firm-level efficiency, were potentially exacerbating Yugoslavia’s debt problem (cited in Liotta, 2001). In more recent years, the Yugoslav experiment has been compared to that of the fabricas recuperadas movement of latter-day Argentina (Sanmartino, 2004; Miramar, 2010) and to the Chavista experiments in co-operatives in Venezuela (Lebowitz, 2007; Harnecker, 2009). When addressing these latter-day experiments, we must note, in particular, that the practice of

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self-management in its most advanced form of workers’ control over the means of production will inevitably address the ‘property question’ whereby capitalist control and property relations are overturned. Selfmanagement may therefore be seen as a mobilising force for social transformation away from capitalism. Alternatively within capitalist enterprises, as Ramsay (1977) identified, employers and the state may seek to utilise forms of worker participation (joint consultation committees, semiautonomous team-working, etc.) to demobilise worker militancy. In this way forms of worker participation may be used by capital and/or the state in reverse trajectory to demobilise, contain or discipline worker militancy and self-determination. Along the spectrum of self-management and workers’ control, but in a transformative direction, the circuit of capital may be interrupted or even broken, as surplus is capable of being distributed socially rather than recycled in money or commodity form. At the height of the Yugoslav experiment, surplus was redistributed to the local community, as well as reinvested in the enterprise or used for higher wage payments and bonuses for the workers involved. De Peuter and DyerWitheford (2010: 30), in addressing this process, construct a concept of ‘labour commons’ whereby the logic of such redistribution would act to create a ‘circulation of the common’ by which associated labour acts with redistributive motives, adding socialist principles to the practicalities of co-operative working. Self-managed factories may thus deviate from the capitalist social relations of production as they may replace capital as the mediator between the worker and their labour power. As such, selfmanagement may not simply be seen as a technical exercise in workers’ decision-making but be seen in ideological terms as an expression of challenge to the logic of capital. Questions can therefore be posed about this experiment. In particular, how should we characterise the peculiarities of Yugoslav self-management in hindsight and what might be the legacy for workers today? In order to clarify, we note first that in the aftermath of the Stalin–Tito split, Yugoslavia found itself isolated from the markets of the Soviet Bloc. The Yugoslavian regime also needed to overcome the problem of industrial under-development. The difficult economic situation was compounded by peasant resistance to the regime, based on nationalist tensions, on the Croatian borders with Bosnia and Serbia. As a result of these latter tensions, some devolution of power was granted to the six republican governments. In order to solve the industrial problems, a five-year plan to industrialise and provide electricity across the country was enacted. It is in this context, and to help create further distance from the ‘Stalinist bureaucracy’, that the party leadership under Tito then went on to develop the theory and practice of self-management of enterprises. The ideology behind

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self-management (samoupravljanje) was framed by the Slovenian intellectual and party leader Edvard Kardelj in association with Ðilas and Boris Kidrič in the late 1940s and enacted by the government in 1950. The driving force behind the process was the critique of the bureaucratisation of the Soviet Union and the perceived need to find an alternative way by which such bureaucratic ossification could be avoided. As reported in The Programme of the League of Yugoslav Communists (published 1959, ISSS), ‘Our own experience, and that of other socialist countries, has shown that when the management of the economy is exclusively in the hands of the State machinery, the inevitable result is a growing tendency towards greater centralisation of power and closer amalgamation of State and Party machinery: they grow stronger and strive to divorce themselves from society and impose their power upon it’ (page 21 cited in Lane, 1976: 144). Further insight into the reasoning behind self-management is provided in the speech of Tito to the Yugoslav Parliament in 1950 when he introduced the legislation (Workers Manage Factories in Yugoslavia, Tito, 1950). In his speech, Tito refers to the writings of Marx, Lenin and Engels, but also to the discourse of ‘socialism in one country’ associated with Stalin. Most importantly, as a precursor to a critique of the bureaucratic ossification of the USSR, he focused on Marx’s predilection of the ‘withering away of the state’ as a necessary transition from socialism to communism. In referring to the contemporary Soviet Union, he then inquires: How do things look in the Soviet Union thirty-one years after the October Revolution? The October Revolution made it possible for the state to take the means of production into its hands. But these means are still, after 31 years, in the hands of the state. Has the slogan ‘the factories for the workers’ been put into practice? Of course not. The workers still do not have any say in the management of the factories. . . . The workers only have the possibility and the right to work but this is not very different from the role of the workers in capitalist countries. The only difference for workers is that there is no unemployment in the Soviet Union and that is all.

Tito then turned his attention to how such problems of state and party bureaucratisation can be solved. He does this by reflecting on the methods by which workers can be drawn into management roles as a step towards communism. He recognises that problems may exist depending on the ‘pace of cultural development’ and the ‘extensive training of workers’ in making such an adjustment, particularly so as Yugoslavia ‘was one of the most backward [countries] in Europe as regards the degree of development of productive forces’. He alludes to the dominance of peasants as the new workers in the factories and expresses the necessity of raising the level of consciousness of the peasant-workers. ‘So that these factories, mines, etc. can be put into

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operation, we need workers who will be capable of mastering new modern techniques . . . they themselves will determine how to work and how long, they will know why they are working and what the results of their labour will be used for.’ As such, we can discern that self-management, in Tito’s vision, was intended to fulfil the double role of de-bureaucratisation of the state by limited decentralisation of decision-making and raising consciousness of the peasant to that necessary for an industrial worker. This was to be achieved by promoting the autonomy of the firm and by creating opportunities for direct and indirect participation in all enterprises within the socially owned sector. The combination of Tito’s two political aims suggests that selfmanagement was seen as a modernisation project for Yugoslavia. So was self-management a genuine attempt to encourage workers control of the means of production, or was it a pragmatic response to adjust policy within the confines of a Stalinist command economy? We can answer this question by examining self-management in practice and focusing on the role of the worker as an active agent. The 1950 law establishing worker self-management established workers’ councils to be responsible for decisions on personnel, production, wages and investment within an enterprise. Within the remit of the term ‘social ownership’, the state, individual citizens and workers had no legal rights to own the assets or capital of productive enterprises. Instead, assets belonged to individual autonomous enterprises, which were governed by the new workers’ councils established by legislation. Other ‘state-owned’ enterprises existed with the public sector. The workers’ council was directly elected for a period of two years, and from among its members an executive or management board was created. The basic responsibilities included managing and approving financial accounts of the enterprise, worker discipline and allocation of income, paying taxes and supervising the management board (Rojek and Wilson, 1987). The managing board was directly elected by the council and comprised of three to eleven members of whom three-quarters had to be production workers. None of the members could serve in the board for more than two consecutive years. Directors oversaw the process and took instructions from the managing board, which was also responsible for production and marketing. Lower-level council units existed within production units from the late 1960s on, known as Basic Organizations of Associated Labour (BOALs). Workers within an enterprise could also participate in meetings of the whole collective of the enterprise and also through referenda on important topics (Pateman, 1970: 89). There also existed, however, an administrative hierarchy within the enterprise led by a publicly appointed director. For Tito (1950), the workers’ role, and that of the trade unions, was clear. He saw self-management as a vehicle for a disciplining force on workers in the enterprise:

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The role of the trade unions under the new conditions where the working people are taking part in the management is somewhat altered. Their functions are now directed mainly towards the most important problem in trade union work – the training and all round cultural advancement of the working people... . As far as the participation of workers in the management of enterprises, or production, is concerned, the trade unions’ task of protecting workers’ interests weakens to a certain extent... . The work of trade unions will also be eased by the fact of the workers becoming acquainted with the process of management of production... . In any case, this will contribute a great deal to the stabilization of work discipline in the factories, mines and other enterprises.

Most importantly, an ideological assumption was made by the Communist Party that workers’ councils would represent a harmony of interests within the enterprise based on consensus. This ideological assumption flowed directly from the structural consideration that, as private property was abolished, there should be no conflict of interest between workers, management of enterprises and the (workers’) state. The structural argument for the harmony of workers’ interests was arguably also grounded in the particular experience of the wartime partisan movement. Organisation of the partisans was largely based on local groups with some autonomy for action, and the partisans themselves had knowledge of both Marxist and anarcho-syndicalist ideology (Riddell, 1968: 55). In concrete terms, the purposes of self-management were referred to by Tito as those expressed in Article 27 of the Bill on the Participation of Working Collectives. The management board of the enterprise, elected by the enterprise workers’ council, … undertakes steps to improve the production of the enterprise, especially as regards the rationalisation of production, increasing labour productivity, lowering the costs of production, improving the quality of the products, decreasing waste; makes decisions on work norms in the enterprise… .

What is striking about such a brief is the similarity between these key aspects of workers’ participation in the running of the enterprise and forms of employee participation to be found in modern methods of human resource management and high-performance working. Danford et al. (2005), for example, depict similar processes to that described above for the Yugoslav enterprise in the capitalist ‘high-performance’ workplace whereby task autonomy and decision-making rests largely with managers rather than the rank and file and where work is intensified as a result of selfimposed discipline through team-working. The emphasis is similar within self-management of an enterprise to increase its internal efficiency, to improve quality and to impose discipline on the workforce. We can also

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sense in Tito’s justification a perceived need to enable Yugoslav enterprises to be competitive in a wider market sense rather than any emphasis of the liberating nature of workers’ control as a method of confronting alienation and building socialism. Indeed, the market orientation of the project would fulfil the purpose of allowing Yugoslav industry to trade with the West given its new found isolation from the Soviet Bloc. As Lydall (1984: 67) notes: … the blockade forced the Yugoslavs to search for other trading partners, primarily in the West, but in any case with market-based countries. Such trade is best promoted by independent enterprises which can deal directly with their foreign trade partners. From a political point of view, also, if Yugoslavia wanted to receive credits from the West to replace those cancelled by the Soviet bloc, it would be an advantage to show that the Yugoslav system was no longer the standard centrally-planned Soviet-type system.

Indeed, Western investors, while cautious of the centrally planned restrictions of the Soviet system, would be even more cautious of investing in companies under effective workers’ control. A major feature of self-management, which has received less attention, is that of its continuing and developing association with the market at the expense of a socialist planned economy. The original 1950 law on workers councils was revised in subsequent years. In 1951, individual enterprises won limited rights to engage in foreign trade, and in 1953 the councils were able to take decisions on product range, investment, supplies and customers. In 1957, the regime was shaken by a strike in the coal mines at Trbovlje which, as Wilson (1979: 117) records, ‘might easily have spread to other mining districts’. Partly in response, a law agreed that year gave more discretion to the workers’ councils to determine how the ‘social product’ (i.e. profit) of individual enterprises might be distributed between investment and wages. The contemporaneous turn to foreign trade led to a period of capital formation and growth of the Yugoslav economy during the 1950s, albeit from a low base. From 1952 to 1965, Yugoslavia rivalled Japan as the world’s fastest growing economy. This transformation of the Yugoslav economy was accompanied with a rapid growth of the urban proletariat with over a million workers transferring from peasant to wagelabour status, thus embedding the system of self-management within the economy (we discuss these changes in the Yugoslav economy in detail in chapter 3). However, by the early 1960s, the Yugoslav economy was exhibiting classic symptoms of a crisis of overproduction, heralded initially by a credit boom which began to fuel individual, corporate and national indebtedness. Economic reforms in 1965 were intended to further liberalise the economy and provide a solution to the crisis. This involved the devaluation of the dinar to stimulate exports but resulted in turn in domestic inflation

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as the price of imported goods increased. Banks were given freedom to run on ‘capitalist’ lines and to invoke discretion when granting credit to individual enterprises. It was after these reforms that an increasing number of strikes were reported in Yugoslavia. The vast majority of strikes were about pay but were mostly short-lived as most factory managers quickly conceded the workers’ demands. The significance of these unofficial strikes, however, is that they appeared to expose an underlying division between state, party and enterprise management (the self-management ‘class’), on the one side, and rank-and-file workers, on the other. Within the self-managed enterprises, the basic level of wages was still set within centrally fixed limits, but enterprises were free to establish top-up bonuses, and in this fashion the role of the centre was confirmed. Lane (1976: 152) reviews the evidence of decision-making structures within self-managed enterprises during this period. He concludes that ‘Studies which have examined the participation of various groups also show that the workers’ council is not the source of effective power in the enterprise’. A hierarchy of power and authority existed with top management and party and union officials exhibiting most power, and workers through the workers’ council the least influential. Kolaja (1965: 67) is cited as suggesting that ‘in both factories [studied] the workers’ council was under the director who was also a prominent member of the League [of Communists] organisation’. Within this process of centralising real power with enterprise directors, the nomenklatura were confirmed as a ruling class socially rooted in economic and political power, with authority and status now based on income and wealth rather than lifestyle based on goods and services in kind. In 1967, the process of separation was deepened when firms were given the right to retain part of their foreign earnings from exports (thus releasing them from the effective obligation to cross-subsidise other firms through transfers of earnings via the central bank). Foreign-owned companies were also allowed to invest in Yugoslavia, subject to a maximum 49 per cent holding of assets. Such market-based liberalisation also had the side effect of increasing unemployment as firms laid off workers in less profitable areas. The resultant unemployment among sections of workers acted in turn to increase inequality among workers in general (Lydall, 1984: 84). Workers against management Within the Communist Bloc, workers’ ability to revolt was always constrained not only by physical and legal repression of the right to strike but sometimes also by the ability to exercise ‘exit’ over ‘voice’. This was particularly the case with Yugoslavia. A safety valve for the state in the face of the threat of unemployment was the emigration of temporary workers abroad

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Workers and revolution in Serbia Table 2.1 Number of strikes in Yugoslavia, 1980–88

Year 1980 1981 1982 1983 1984 1985 1986 1987 1988

Number of strikes

Number of strike participants

247 216 174 336 384 na 851 1,685 1,851

13,507 13,504 10,997 31,776 29,031 na 88,860 288,686 386,123

Average number of participants in one strike 55 62 63 64 75 na 104 171 208

Source: Documentations of Council SSJ, Belgrade 1989

to countries such as West Germany, France and Britain, which rose from 138,000 in 1964 to 401,000 in 1968 (Schrenk, 1979). Emigration fulfilled three functions for the regime. First, by allowing exit, it took the pressure off workers’ discontent within the economy and in doing so suppressed the desire for voice. Second, it allowed for significant remittances back to Yugoslavia which boosted foreign exchange and strengthened domestic demand. Third, it confirmed Yugoslavia as a willing partner of Western capitalism, in contrast to the ‘closed’ nature of the Soviet Bloc. However, the accumulated strains within the Yugoslav economy could not be warded off forever by the choice of ‘exit’. The first recorded strike under Tito was in 1957 in the Slovenian mining town of Trbovlje. The strike challenged fundamentally the premises of the ‘workers’ state’ and the ideology of communism. As importantly, the strike represented a challenge to the system of self-management, in that it presented an alternative way forward for ordinary workers to achieve their goals of better living and working (Marinković, 1995). In 1969, a further strike took place among dock workers in Rijeka, and in 1973, a major strike of 2,000 workers took place in the Zmaj factory in Belgrade (Shabad, 1980). Strikes once again developed towards the end of the 1980s (see Table 2.1), with 851 recorded strikes (involving 88,860 workers) in 1986; 1,685 stoppages with 288,686 workers in 1987; and 1,851 strikes with 386,123 workers involved in 1988, when strikes were finally allowed legality (USDS, 1987, 1988). Once again, the problems of the Yugoslav economy, this time that of a rapid rise in the rate of inflation to 150 per cent, were met by further market-based liberalisation. This included the expansion of private investment and the encouragement of further foreign direct investment. Self-management was a casualty of the process and

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was being phased out by 1991 as the ‘normalities’ of unfettered market capitalism took root. In 1989, the fall of the Berlin Wall further sharpened the potential for antagonism with Yugoslav society, but the strike wave in Yugoslavia abated with the onset of nationalist calls and the opening of the civil wars. However, in 1993 strikes erupted with a vengeance within the public services. In February, Belgrade’s transport workers took strike action, followed by air traffic control operators in August and then key workers in the electricity supply industry in December. Such strikes within the public sector were again a major shock to the body politik, as previous strikes during the 1980s had largely been confined to manufacturing enterprises and the productive industries. One area which appeared immune from strike activity was the weapons factory of Kragujevac, whose workers were paid well and had previously avoided solidarity action with their less fortunate colleagues elsewhere in manufacturing. However, all this changed in 1996 following the signing of the Dayton Peace Agreement. Arms production went into reverse, and the threat to jobs and livelihoods of the arms workers led them to take their own strike action. The same year also saw the first major worker demonstrations in the autumn in Belgrade against poor wages and unemployment, undoubtedly a prelude to the events four years later.

The challenge to official ideology The very existence of strikes within the system does, of course, directly confront the ideological assumption encouraged by the communists that consensus would prevail in the workers’ state. In reviewing the evidence of this potential paradox, Shabad (1980: 300) observed that most studies show that, on the whole, the director, lower level managers and technical staff exert the greatest amount of influence in the making of decisions within the enterprise... . (and) Despite the great stress placed on the values and norms of equality and democracy, and despite the existence of formal participatory institutions within the enterprise, neither actual political equality nor fully developed workers’ control has been achieved.

In reality, power and authority remained firmly located within the administrative and technical hierarchy (Tanić, 1967). As Novosel (1973) observed, this meant that it was difficult for ordinary workers in the enterprises to hold their representatives on the workers’ council to account. Workers who belonged to the League of Communists were also more likely to be workers’ council representatives than non-communists (Singleton and Topham, 1963), meaning that the ideological framework of consensus

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and harmony was constantly replenished. Indeed, available statistics on the social composition of the League of Communist members reinforce this point. A survey by Barton et al. (1973: 116) indicates that in 1946, 28 per cent of members were blue-collar workers, only 10 per cent white collar, while 50 per cent were private farmers (the remainder being housewives, students, retired persons and entrepreneurs). By 1971, the composition included a slightly reduced blue-collar proportion of 26 per cent (after peaking at 37 per cent in 1962), private farmers had reduced to just 7 per cent (reflecting the increasing industrialisation of the working population), while white-collar workers’ share had increased fivefold to 51 per cent. Most importantly, the role of local and national government officials remained crucial in determining matters of both production and distribution. As Lydall (1989: 78–9) trenchantly noted: Yugoslav governments, at all levels, but especially at communal level, exercise final control over all major investment decisions in ‘their’ enterprises. They sanction credits from local banks, despite the fact that the banks are supposed to be controlled by the enterprises. They force local firms to take on additional quotas of workers, irrespective of whether they are needed or not. They choose the directors of local enterprises and banks, ensuring that they are politically reliable, and often give these posts to politicians who are not well qualified to fill them. And they even put pressure on local enterprises to follow a policy of autarky. For example, they block enterprise plans to invest in other communes (or republics); and they try to ensure that, so far as possible, local enterprises buy their supplies from other local enterprises... . So, in spite of the high claims for the self-management system, the workers were not to be trusted to manage their own affairs. They were to be kept strictly under the control of the local party bureaucracy. The motives for this policy were not, of course, simply ideological. If the workers had been allowed to exercise genuine rights of self-management, tens of thousands of party bureaucrats would have lost their power and their comfortable jobs.

Given the official ideological framework, it is not surprising that industrial disputes, when they did arise, were likely to be considered by the authorities as a product of under-developed consciousness (and here we can recall Tito’s mission to raise consciousness through self-management). The ideology was carried in practical terms by the official trade unions, which were inextricably linked to the ruling authorities and unable or unwilling to act independently of either the state or employers (Pavlović, 1984). This was particularly the case once the system of self-management had become embedded, as they no longer acted as bargaining agents over distributive issues but focused solely on integrative matters within the framework of the enterprise under the aegis of the ‘workers’ state’. The vast majority of strikes, understandably when framed in the context described, remained

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‘unofficial’, of short duration, restricted to the enterprise rather than a sector as a whole and were mostly confined to blue-collar rather than white-collar or technical workers. The survey reported by Jovanov (1972: 87) found that 80 per cent of strikes in his study of 512 strikes that took place between January 1966 and August 1969 were by blue-collar workers. The focus of disputes was over the distribution of resources within the enterprise, and, as the dividing line was between blue-collar production workers and managers and technicians, strikes manifested themselves as class-based conflict. Jovanov’s survey thus reports that almost two-thirds of strikes were over wage- and income-related problems, with the remaining third focused almost entirely against deficiencies of information and representation within the works council (1972: 90–1). The nature of such strikes under Tito has been graphically described by Shabad (1980: 301) in the case of the port workers’ strike in Rijeka (Croatia) in 1969. A series of four strikes during that year resulted in the replacement (from above) of the company’s director by a local politician. Shabad describes the situation: The new manager persuaded the workers’ council to give him wide latitude to deal with the firm’s serious economic problems. Accordingly, in the first half of 1969, the council ratified a number of stringent economy measures whose impact would be felt most severely by blue-collar workers. These included significant cuts in wages, overtime pay and piece rates, and reductions in such benefits as vacation subsidies, sick-leave allowances and overtime.

Moreover, much of the decision-making was taken secretly without full recourse to the workers’ council representatives. At the same time, a banquet had been held at the firm’s expense at which cash bonuses equivalent to two months dock worker earnings had been handed to ‘good workers’ on the council. A third of the 4,500 workforce then took strike action, and after two days of strike action, the economy measures were rescinded.

What sort of socialism? During the 1960s and 1970s, much political and academic interest was focused on the Yugoslav ‘experiment’ in self-management. As we have already discussed, the political debates highlighted divisions not only in the communist left but also in more radical Trotskyist and neo-Trotskyist organisations on the radical non-Stalinist left. Academic attention focused primarily on the possibility of establishing participatory democracy against recognisable tendencies towards oligarchy. Pateman (1970) provided a useful review of the contemporary debate, in which she optimistically suggested that increasing experience of ordinary workers within the system would be the key to the further development of what she described as the

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goal of the ‘participatory theory of democracy’, whereby ‘the necessary condition for the establishment of a democratic polity is a participatory society’ (Pateman, 1970: 102). Indeed, to reinforce her generally optimistic assessment, she pointed to the research of Blumberg (1968: 215), who reported that between the 1950s and 1960s over half a million individuals representing about one-quarter of the total labour force had served on workers’ councils and managing boards. Tito himself, of course, had also suggested that self-management might act to raise the consciousness of newly industrialised workers, albeit towards an understanding of the role and place within a developing ‘workers’ state’. In this respect, the importance of agency is highlighted to complement the restraining or enabling influence of structure in establishing workers’ democracy. But in assessing the reality of ‘actually existing self-management’, we must return to political economy and place the experiment in the context not only of the Stalin–Tito split but also the isolation of Yugoslavia that resulted from the split. The Tito regime wished to distance itself from the particular form of state capitalism evident in the Soviet Union and all its associated centralised bureaucracy. Self-management appeared as an appropriate tool to re-express classical Marxist–Leninist principles of workers’ control of the means of production and the withering away of party and state from overall power. However, such workers’ control of the factories in Yugoslavia was never achieved ‘from below’ as a process of factory insurrection and as part of socialist revolution. It was achieved ‘from above’ by state decree, reflecting the lack of workers’ self-activity so essential in the Marxist revolutionary dynamic. Second, while the League of Communists wished to de-Stalinise, in reality it remained firmly in the tradition of Stalin, centralised, with party control over the leading personnel in the factories which always militated against control from below by the rank and file. Third, as Yugoslavia sought to build bridges with Western market capitalism, self-management proved useful in terms of enterprise innovation, control and direction. In effect, the pull of the market confirmed self-management as little different from the employee participation or ‘industrial democracy’ experiments which had run in parallel in Western capitalist enterprises. A dialectical relationship was thus established between self-management and marketisation. As more powers to retain and redirect surplus were given to self-managed enterprises, so too were those enterprises forced into competition with one another and with those in the Western markets. Such tensions and contradictions were not without political ramifications within the Yugoslav Communist Party. Wilson (1979: 125–9), for example, records details of arguments between ‘conservative communists, who wished to maintain a policy of rapid capital accumulation, and ‘liberals’, who favoured further

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decentralisation and self-management. Within this battle, the role of the ‘official’ trade union leadership of the CTY (Yugoslav Federation of Trade Unions) appeared influential in tipping the balance towards liberalisation. However, the ‘conservatives’ were still able to hold some sway as the economic boom of the 1950s slowed and eventually came to a halt in the 1960s. Policy was thus caught between the two camps, and the contradictions within the Yugoslav special path of self-management remained. On balance, rather than pull Yugoslav socialism towards communism and the ‘withering away’ of the state, self-management had acted to pull the system further into the market economy. Continuations The ultimate failure of self-management to provide a secure socialist alternative in Yugoslavia forms the background to our following story of workers and revolution in the Milošević period and beyond. Tito died in 1980, and in the ensuing period a collective presidency drawn from each republic was established. Efforts to further marketise the economy were undertaken in the late 1980s under Yugoslav Prime Minister Ante Marković, but these efforts were framed by increasing economic and political difficulties as debt increased and inter-republic tensions began to emerge. Yugoslavia turned to the International Monetary Fund (IMF) for financial help, and in 1989, the conditionality attached to loans spelt the death knell of selfmanagement. The Marković government under the pressure from the IMF thus introduced the Law on Social Capital (1989) allowing for a mass conversion of socially owned enterprises into joint-stock companies. Milošević assumed power as the president of the Republic of Serbia within the Socialist Federal Republic of Yugoslavia in the same year and led the Socialist Party of Serbia from its foundation in 1990. In 1990, the gathering crisis of the Yugoslav state came to a head at the 14th Congress of the League of Communists of Yugoslavia. Milošević, once an anti-nationalist in defence of Titoist Yugoslavia, turned his position by agitating for ‘one person one vote’ in the Republic, which would have consolidated a majority Serb position. His position was calculated and deliberately exacerbated nationalist tensions, leading to the Slovenian delegation walking out of the Congress and effectively liquidating the League of Communists. The civil wars followed, constructed by Milošević in Serbia and Tudjman in Croatia to deflect class conflict (Gagnon, 2004), with Milošević eventually assuming the presidential position of the rump of Yugoslavia in the Federal Republic of Yugoslavia from 1997 to 2000, the year of the revolution. After the 1989 Marković reforms and the break-up of Yugoslavia, progress in dismantling socially owned enterprises was uneven, and so

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remnants of the system of self-management have lingered in some enterprises within the former Yugoslavia. In Slovenia, as Stanojević (2003) reports, within the terms of a law passed in 1993, the workers’ councils have transmuted under the process of gradual change into diluted forms of German-style works councils. This gradualism is a product of the social democratic body politik that was integral to Slovenia’s secession from Yugoslavia and has taken place with general support from the unions. They now form themselves as consultative bodies with some powers over personnel decisions and business plan but far removed from socialist ideas of workers’ control over production. The relative success of the concept of workers’ co-determination in Slovenia, even as a watered-down version of self-management, may be a result not only of the social democratic impetus to Slovenia’s foundation but also because, as the most economically successful region, workers had gained most from self-determination and were therefore more amenable to its form (see Phillips and Ferfila, 2003). A law was also passed in 1996 in Croatia establishing rights for works councils, but with limited support from some unions and opposition from others (Fulton, 2001). The Montenegrin union federation, meanwhile, opposed the introduction of works councils preferring instead UK-style union independence from management structures (Upchurch, 2006). We have attempted in this chapter to describe the character of the workers’ movement as it developed first during the early partisan years and then under the period of self-management. In many ways the movement passed from immaturity to maturity during the Tito years, but full maturity was corrupted and stunted by the ideological framework of Tito’s particular version of authoritarian communism. We will show how the move to maturity was unblocked in a later chapter, but first we need to provide some economic context to the story. Notes 1 The name Tito was given to him as a testament to his organisational skills, whereby, in Serbo-Croat, ‘ti’ (You) will do this or that ‘to’, that is, Ti, to (in Maclean, 1980). 2 This alliance between Churchill and Tito almost certainly included help from the secret British Special Operations Executive (see Howarth (1980) Chapters 4 and 5). 3 Churchill later recalled the encounter in his memoirs: ‘The moment was apt for business, so I said, “Let’s settle about our affairs in the Balkans. Your armies are in Romania and Bulgaria. We have interests, missions, and agents there. Don’t let us get at cross-purposes in small ways. So far as Britain and Russia are concerned, how would it do for you to have ninety percent predominance in Romania, for us to have ninety percent predominance and go fifty-fifty about Yugoslavia.”’ Churchill wrote the figures down on a slip of paper and pushed it

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across the table to Stalin. ‘There was a slight pause. Then he took his blue pencil and made a large tick upon it, and passed it back to us. It was all settled in no more time than it takes to set it down.’ A fascinating account of this period is written by Ðilas in Conversations with Stalin (1969). Available at www.ibrp.org/en/articles/2000-10-01/appendix-a-natalya-trotskybreaks-with-the-fourth-international accessed 13 March 2009. Trials of Trotskyists and others and their sentences were reported in Borba, 4 July 1948. Jeffrey Sachs later advised the Polish government and encouraged the ‘shock therapy’ approach to economic transformation. In later writings, he appeared to retract some of his earlier enthusiasms for neo-liberal prescriptions.

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Serbia in the world economy

In this chapter, we examine the problems Serbia has faced within the global world economy in order to contextualise the limits of the aspirations and expectations of the workers’ movement. We have already described the significance of the former Yugoslavia’s debt in engendering inter-republic tensions. This accumulated debt adversely affected Serbia’s ability to stabilise its economy in the post-Miloševič years. Problems of indebtedness remain, and the government’s strategy of privatisation, while achieving some success in its early sales targets, has created internal societal fractures due to insider dealing and corruption. Such ‘crony’ or ‘wild’ capitalism has become a feature of Serbia, imbibed as it is with personal networks, crime and a burgeoning informal economy. However, we need to distinguish between the general economic problems associated with post-communist transformation and those which have applied specifically to Serbia. In order to do this, we begin with an overview of transition economies and assess their experience from a variety of perspectives. General problems of post-communist transition Spatial and socio-political variants continue to exist within post-communist transformation states. While Yugoslavia had been open to Western markets more than other communist states, the problems of post-communism are remarkably similar, centred as they are on the deleterious effects of neoliberal restructuring and debt. In all transformation countries, the ingredients of neo-liberalism such as marketisation, privatisation and liberalisation have sometimes stalled or been delayed, and in some countries the role of the state in maintaining control over production and distribution of goods and services remains strong. Most importantly, two key aspects of market failure are evident across the transformation states. First, predictions from orthodox economists of economic convergence with the West have failed to materialise. Second, crime, corruption and informal working persist and in many cases have become more prominent in both absolute and relative

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measurement. As such the market appears ‘dysfunctional’, exhibiting continuing inefficiencies. Dysfunctionality, and its persistence, is thus characterised by inefficient forms of market regulation, the lack of regard for the rule of law, together with continuing problems of crime, corruption and state capture models of governance. The associated poor business ethics and weak standards of corporate governance are a consequence of the combination of market liberalisation, dependence on labour exploitation for comparative advantage and the abandonment of one-party authority over control of industrial production. This chemistry of events allowed rapacious rent-seeking by individuals well placed to benefit from the newly deregulated regime (Filatov, 1994). In turn, this has created political and economic space for the informal economy to grow and mafia crime and corruption to flourish. The dominant economic model, revealed in neo-liberal prescriptions applied by governments, international financial institutions and their advisors, was that of the establishment of comparative advantage through trade integration, capital shift and equalisation of marginal profit rates. This Heckscher–Ohlin–Samuelson international free trade model would anticipate the development of comparative advantage in national production regimes, re-enforced by capital transfers and foreign direct investment (FDI) in the cheaper labour economies of the East, complemented by labour migration in the opposite direction (Dunford and Smith, 2004). The technology gap between East and West would be bridged by the process of investment, and this would in turn lead to a closure of the productivity gap. This would then act to equalise marginal profit rates as labour costs and rates of return on capital investment converged. Shock therapy was designed to act as an enabling vehicle of this process, by clearing the postcommunist market of labour rigidities and allowing investment opportunities in both privatised formerly state-owned industries and greenfield industry. The opening of markets, aided in some states by accession to the EU, would also act as a spur for convergence. However, after twenty years and more of post-communist transformation, we find that while there is clear evidence of trade integration, the evidence on convergence is weak. In fact, the recovery of individual economies from the initial shock of the fall of the command economies in CEE after 1989 has been both slow and extremely uneven. GDP growth rates over the last twenty years have reached 3 per cent in Poland and have peaked at no more than 0.8 per cent in Romania and Bulgaria, while the Baltic states have hardly grown at all. Poland was the first country to recover to 1989 levels of production, which it achieved in 1995, followed by Slovenia (1998) and Hungary (2000). For many other transformation states, production levels have still not reached their 1989 levels. Serbia sits alongside Ukraine at about 70 per cent of

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1989 levels of production, while Latvia is languishing with production levels in 2010 only 56 per cent of 1989 levels.1 The difficult return to 1989 production levels also has a geo-economic dimension. Those states geographically closest to the European Union generally have higher totals of production relative to 1989 and higher income per capita. Those former communist states who have become full members of the EU have also fared better than later members, or non-members. Both Slovenia and the Czech Republic, for example, record income levels per capita closest to the EU 15 median at approximately 75 per cent in 2008 (measured in purchasing power parity – PPP). However, most former Soviet Union (CIS) states are between 5 and 10 per cent, with the majority of EU accession states at about 50 per cent (World Bank, 2010a: 26). There is evidence of convergence of incomes since 1998, but this is often from a very low starting point measured in purchasing power parity (PPP). Nominal wage levels remain much smaller than in the West. The convergence that has taken place is largely explained by a growth of real wages from 2003 to the financial crash of 2008. This growth followed a major fall in real wage growth in the immediate period after 1989, and in some countries, such as Bulgaria and Lithuania, the recent growth is still not enough to bring real wages back to the levels of 1989 (Onaran, 2010). There is a continuation of a heavy presence of informal working within the post-communist states. Data on informal working is difficult to assemble both because of lack of data officially assembled at government level and because of the difficulties of definition, and, as a consequence, is generally measured by independent surveys. Schneider (2003: 26) estimates, with figures from a variety of sources, ‘that the average size (measured as proportion of GDP) of the shadow economy in the nine CEE Transition Countries has increased from 23.4 per cent for the years 1990–1993 to 29.2 per cent in 2000–2001’. Within the countries of the former Soviet Union, the average size of the informal economy reached 44.8 per cent in 2001, an increase from an estimated 35.7 per cent estimated for 1990–93 by Johnson et al. (1997). While informal working has also been growing in the states of the European Union 15, it has grown at a lower overall level and not by as fast a rate as in the post-communist states. This is supported by evidence collected by Galgóczi and Mermet (2003) on wage share. Estimates were that the share of wages in the GDP of the ten Central and eastern European countries is 40.5 per cent on average, while the same value for the EU 15 member states is 59 per cent. Rather than falling as a share of all wages, informal working seems still to be growing. The phenomenon of ‘jobless growth’ is also apparent across the region, at a scale larger than evident in the countries of the EU 15 (Boeri and Garibaldi, 2006). Employment levels are depressed and decreasing in total,

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while unemployment levels increase. Furthermore, the evidence would suggest that the 2008 financial crisis has had generally more severe effects in the post-communist states than in most of western Europe. Hungary, Latvia and Romania have resorted to IMF credit, but the associated level of austerity introduced as part of the package is more intense than West European comparisons, including that of the ‘peripheral’ states of Portugal, Ireland, Greece and Spain (Onaran, 2010). In Latvia, for example, public sector wages have been cut by 35 per cent and pensions by 10 per cent, while VAT has been increased from 18 to 21 per cent. In other countries, such as Estonia and Lithuania, deep cuts of 20 per cent have also been enforced as part of austerity measures (Gligorov et al., 2009). But although the net result of the persistence of the above features has been a miserable one for the mass of working people, it has been a lucrative one for the elite. Inequality has increased markedly. Pre-transition Gini coefficients were around the 0.25 mark across the region but had increased to levels approaching 0.36 by 2005. The average coefficient for the EU 15 in 2005 was 0.31,2 so only in the area of inequality has convergence taken place. A final problem is that of clientelism and state capture leading to crony or ‘wild’ capitalism. States wish to attract FDI, but concessions are often given in an unstructured process which lacks transparency. This is partly caused by the collapse of party authority and command planning, and partly by delayed societal adjustment to new regimes of practice. As a result, factions of competing new ruling elites jostle with each other to gain advantage through processes of ‘state capture’. It is these conditions which give rise to clientelism and the use of private networks which some have defined as ‘crony’ capitalism (Gustafson, 1999; Peev, 2002), others as ‘patrimonial’ capitalism (King, 2007) or ‘wild’ capitalism’ (Lane Bruner, 2002; Harper, 2006). But privatisation and ‘wild capitalism’ are also associated with wider social and economic effects. Inequality and poverty are likely to increase as social safety nets are downscaled or withdrawn under ‘conditionality’ pressure from the international financial institutions in an effort to ‘roll back’ the scope and content of responsibility of government. This is accompanied with an ideological emphasis on individualism as the mantra of the free market pervades everyday discourse and practice. Serbia was not excluded from such processes of ideological restructuring, which, at least in the immediate years following the upheavals of 1989, was aided and abetted by political elites, management consultants and some academics from Western business schools (for a critique of this process in Serbia, see Cicmil and Upchurch, 2006). Second is a downgrading of the protective labour codes which were integral to the former system but then perceived to be a restraint on market forces. ‘Protection’ in this context entailed regulations on dismissals and redundancies as well as pension

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provision. Such downgrading is again a focus of IFI conditionality (see next chapter). Third is a disregard for, or absence of, rules and regulations which govern the behaviour of corporations and corporate elites within wider society and the market (cf. Aglietta and Rebérioux, 2005). Added to this is weak and underdeveloped agencies within ‘civil society’ (Howard, 2003), which might otherwise have been able to keep selfish corporate and individual interests in check. This ‘weak’ civil society in most cases sits side by side with authoritarian state tendencies left over from the previous era. The net result of these tendencies is that political, economic and social space is created whereby norms of expected behaviour within society are formed which emphasise personal rent-seeking at the expense of ‘ethical’ business behaviour. Clientelism will mean that the process of insider acquisition of economic power also expands into the political arena. In such a scenario, the door is opened for ‘state capture’ models of political process, whereby competing elites jostle for privilege and position while having a collective vested interest in preserving oligarchical and clientelist systems of governance. In these ‘capture economies’, oligarchs and captor firms do not pressure states to regulate through institutions; rather they seek to enhance their property rights by directly purchasing advantages from the state (Hellman et al., 2000). Indeed, Hellman and Kaufmann (2001: 1), for the IMF, construct a direct linkage between state capture and corruption vis: In transition economies, corruption has taken on a new image—that of so-called oligarchs manipulating policy formation and even shaping the emerging rules of the game to their own, very substantial advantage. We refer to this behavior as state capture. Though this form of grand corruption is increasingly being recognized as the most pernicious and intractable problem in the political economy of reform, few systematic efforts have been made to distinguish its causes and consequences from those of other forms of corruption. Moreover, there have not been any attempts to measure this specific type of corruption and to compare it across countries. We define state capture as the efforts of firms to shape the laws, policies and regulations of the state to their own advantage by providing illicit private gains to public officials.

The persistence of wild and crony capitalism is explained in orthodox accounts primarily by agency factors linked to blockages to reforms. Such ‘blockage’, it is suggested, is engendered by corrupt insiders with vested interests (Gustafson, 1999; Lane Bruner, 2002; Peev, 2002; Harper, 2006). For proponents of neo-liberal restructuring, the key question is then how such features of blocked reform can be overcome (e.g. Havrylyshyn and Odling-Smee, 2000). The World Bank also adopts the position in its working papers that many of the features of wild capitalism, including cronyism,

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crime and corruption, are temporary features that can be overcome by further institutional reform. In its 2002 report on transition, the bank focuses attention on removing obstacles to ‘new entrants’ into the business system who may rise and challenge ‘oligarchs and insiders’ (World Bank, 2002: xxii). The report (2002: 106) also attempts to contextualise the problem of lack of reform by reference to the competitiveness (or not) of the individual political systems within each state. ‘Concentrated’ political regimes (e.g. Croatia, Bulgaria, Russia), it is argued, are more open to ‘state capture’ and reform blockage than ‘competitive’ regimes (e.g. Poland, Slovenia, Hungary). The necessity of tackling the ‘vested interests’ within post-communist states is also a recurring theme within IMF documents. Such vested interests, it is argued, might be overcome ‘through the emergence of a strong leader willing to take on the vested interests, or from the political clout of a growing middle class, or pressure from foreign competitors and international financial institutions’ (IMF, 2000). Other commentators offer cultural/historical explanations for the persistence of bribery and corruption. In particular, the (relative) lack of corruption in Western countries is explained by religious tradition, whereby countries which have a background of British colonial rule, with Protestant origins and a long exposure to ‘democracy’, are less likely to experience corruption than poorer, non-English speaking, non-Protestant countries (see, e.g. La Porta et al., 1999; Treisman, 2000). One culturalist argument put forward to explain continuing corruption comes from the ‘Slavic’ tradition depicted in Serbia. That is to say that within Serbian popular tradition, it is considered perfectly acceptable to bribe someone in order to ‘oil’ the process of business. Commercial bribery becomes acceptable when local or national public authorities remain impassive to the problem, or engage in corruption on a widespread basis themselves. Thus, ‘Popular tradition tacitly approves and has great understanding for an individual who by bribery expedites or receives certain decisions or settlement, because it knows that the state administration or authorities, or state employees who are representatives of the authorities, can always find an excuse for not issuing a ruling’(Antonić et al., undated: 26). However, it would be mendacious, as in the above examples, to explain the high incidence of corruption, cronyism and ‘wild’ capitalism purely by ethno-pathology. Structural factors must also be considered. For example, ‘Anglo-Saxon’/Protestant countries have long held a dominant position in the world economy and would have accessed and controlled markets through the exercise of power relations which reflected their dominance. Many British ex-colonies also now score badly on indices of corruption. Corruption may also be more nuanced and subtle in advanced Western democracies, manifesting itself in informal networks and given as contractual favours rather than as hard

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bribes. Tunnelling of share options, corporate raiding and management buy-ins are common features of ‘Western’ capitalism and are perfectly legal practices which embed excess and personal gain. Reward systems of shares and bonus payments also operate on a mimetic basis, re-enforcing excess by benchmarking ‘median’ rates determined by uncontested remuneration committees. In reality, there is interplay between structural and agency factors which offers a more reliable explanation of corruption. In transformation states, this interplay is spurred by opportunities created by privatisation of state assets and deregulation of labour markets, the particularised political economy of transformation states, rather than be seen in terms of ‘blockages’ to ‘reform’ is better understood by reference to theoretical frameworks which accommodate unevenness and combination of development and ‘western’ practice. It is to a discussion of these alternative explanations that we now turn. More explanations? Both orthodox and heterodox Orthodox economic explanations for the lack of convergence focus on a number of explanations. These explanations include claims, inter alia, that in terms of production statistics, the pre-transformation states had falsely calculated totals for production (Åslund, 2001) and that the ‘fall’ in production post transformation is exaggerated as a result. However, even given the likelihood of such false calculation, the falls in output have been excessive, and over a twenty-year period some consistency in statistical production has been achieved. Other commentators point to the impact of external trade shocks, a mismatch in aggregate demand and supply of goods and services, or simply policy mistakes as the cause of falls in output (see Turley and Luke, 2011: 242–3, for a review of these arguments). Some also point to a ‘theory of disorganisation’ as an explanatory factor, whereby existing supply chains under the command economy have been broken by the turn to the market and new supply chains have not yet developed in response (Blanchard and Kremer, 1997; Roland and Verdier, 1999). More salient are the possible hypotheses presented by Lucas (1990) in addressing the problem of why capital generally does not flow from rich to poor countries. He suggests, in respect to underdeveloped economies, that human capital effects, political risk and barriers to entry in profitable sectors are better explanatory factors for the lack of convergence than theories which depend on capital mobility. But most transformation states had high levels of human capital, skills, literacy and education. This would make their potential experience different from the underdeveloped countries alluded to within Lucas’ argument. The above explanations, which may all have some validity in the short term, begin to appear unsatisfactory given the extended

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period of more than twenty years of transition, in which output levels, while sometimes growing, have struggled in both relative and absolute terms. Neither do they necessarily explain lack of convergence in other indicators, such as labour market participation, or give reasons to explain the relative increase in informal working. While neo-liberal prescription promulgates the argument that blockages to progress are simply a product of delayed ‘reform’, a variety of theories offer more nuanced explanations. These explanations revolve around the dimensions and combinations of path dependency, path contingency and path shaping. The emphasis on path dependency follows from the early work of Veblen and Myrdal whereby development is seen as a product of culture and history. Thus, variance in experience within post-communist transformation can be explained by variance in historical development of institutional practice. ‘State-led’ models (e.g. Amsden et al., 1994) place alternative emphasis on the difference between Western market-based capitalism and that which might be appropriate for transformation from command to market economy. Endogenous rather than exogenous pressures are emphasised, leading to an alternative prescriptive model of the ‘gradualist’ development of a Western-style social democratic/corporatist order. Contemporary analysts within the varieties of capitalism (VoC) approach may also emphasise the embeddedness of institutional complementarities. Such accounts generally locate post-communist transformation within a liberal market economy paradigm (Feldmann, 2006; Buchen, 2007), with the exceptional case of Slovenia as a co-ordinated market economy. However, the VoC approach proves unsatisfactory when it comes to explaining wild capitalism, cronyism and generally ‘dysfunctional’ marketbased behaviour. The ideal ‘types’ of liberal or co-ordinated market economies are presented as bundles of institutional complementarities designed to promote efficient market capitalism. Wild capitalism is characterised by chaotic and rule-evasive behaviour which denies complementarity or efficiency. Secondly, as Jackson and Deeg (2006: 571) highlight, ‘existing typologies are too focused on economic co-ordination rather than distributional outcomes, the politics of class compromise are often missing, and consequently … the (VoC) literature has failed to understand the dynamics of change in contemporary capitalism’. Once again, it is precisely through such ignored ‘distributional outcomes’ that we can see a failure of convergence in GDP/per capita, the persistence of an increasing gap in income equality and a persistence of high unemployment. The dominance of neo-liberal practice has also been explained in pathdependent terms by the trajectory of economic restructuring within the region. Indeed, a focus on exploitative relationships can be discerned in some critical regulationist and Marxist interpretations of transformation.

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In this scenario, the entry of the post-communist economies into the world market was predicated on a state strategy of encouraging and promoting production regimes based on labour rather than capital intensity. For some, this was an elite-driven process whereby state restructuring in postcommunist states was linked to the interests of Western-based transnational capital (van der Pijl, 1993; Shields, 2008). Gowan (1995) similarly argued that West European capital sought eastward expansion precisely to exploit cheaper labour and expand markets. As such, extensive labour exploitation, achieved through poor working conditions and relatively low pay, was necessary both for capital accumulation in the East and profit maximisation of Western-based capital expanding to the East. Neo-liberal marketisation may then have fulfilled the objectives of Western capital by opening up new production opportunities in geographical spaces unfettered by restraints on profit maximisation. Indeed, models of exploitation might explain the denial of the ‘factor-price equalisation’ model to operate and go some way to explaining non-convergence. Neo-liberalism, in such accounts, is thus subject to its own contradictory forces and produces a paradox of low consumption demand in the East which holds back pressure for higher rates of wage growth, productivity increase and factor equalisation. Data collected by Onaran (2008) suggests that wage growth has generally not kept pace with productivity growth (GDP/employee) in the region, especially in manufacturing. Unit labour costs would therefore have fallen in relative terms, confirming the exploitation ‘model’. This is not to say that ‘underconsumption’ has been the cause of the crises in post-communist transformation, but rather one of its key consequences. Furthermore, in terms of general political economy, there is little room for the institutions of social democratic models of corporatism and associated ‘good’ governance to develop within this model as they did in post-war western Europe, not least because the conditions of mass consumerism and Keynesian welfarism are absent in the post-communist states (Bohle and Greskovits, 2004; Bohle, 2006). Uneven and combined development As an aid to developing such an approach, we might see that the process of transformation, and its outcomes, is governed by both uneven and combined development of the social forces of production. Such theories of uneven and combined development have a long history and were applied most trenchantly to analyses of the form and content of the 1917 Russian Revolution, most notably in Trotsky’s History of the Russian Revolution (1977) and by Novack (1980). More recently, uneven and combined development has become a sub-study in disciplines as diverse as evolutionary

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biology, archaeology, anthropology and international relations theory with research centres devoted to its study. An ongoing debate has developed about whether or not the theoretical framework can be applied transhistorically (Rosenberg, 2006) or can be only limited to the study of capitalist regimes of production (Ashman, 2009). Given the globalising period of capital expansion which embraced the 1989 revolutions, such theories are trenchant as the post-communist economies enter the world market order on an ‘unfettered’ basis (see Dale (2011) for a more detailed exposition of this theoretical position). As these economies entered the world market, they were subsumed into a generalising tendency to equalise the rate of profit under the weight of the law of value, in that product competition became governed by the necessity to produce with the minimum amount of labour time (cf. Hardy, 2009). However, as Barker (2006) suggests, it is this very process of creating evenness in the rate of profit that exposes unevenness in the productive capacity of enterprises within transformation states: The interaction of capitals, through the circuit of production and circulation, involves unevenly advantaged capitals which differentially invest in new means of production, thus tending to cheapen commodities at the point of sale. They act in this way because of competition between them, and because, in any case, technical change does not occur evenly. (Barker, 2006: 81)

Where unevenness exists, it is exposed in the final price of goods and services with the consequence of enterprise collapse and industrial restructuring. Evenness, in the case of neo-liberal prescriptive methods under transformation, may only be achieved on an exploitative labour-price model and (combined) ‘Western’ forms of work organisation and technological input. In such a model, the extraction of value is either achieved through extensive forms of exploitation (lower pay, longer working hours, etc.) or intensive exploitation (technological inputs). However, the reliance on an exploitative model further highlights unevenness, not only between East and West but also within and between post-communist states themselves. Unevenness is thus a combination of both backwardness in technique, productivity and innovation as well as forwardness by which the backward nations skip whole phases of development by adopting the most advanced techniques of production and industrial organisation. Unevenness between the post-communist states described in the opening section therefore reflects different combinations of (relative) backwardness and processes of ‘skipping over’ to more advanced stages within states’ own unique place in the world economy. The combined aspect of development follows on from the unevenness, in that the most modern and technologically efficient modes of production sit side by side with ‘pre-existing modes’ of organisation (Burawoy, 1985: 99). As such, work organisation

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expressed as extensive exploitation of cheap labour and low cost may be found alongside ‘cathedrals in the desert’ where advanced technical processes are applied to extract value through intensive means (Hardy, 2009). As Davidson (2010) suggests, uneven and combined development affects not just the economy but society in general, its norms of behaviour and patterns of authority and control. So there emerges a direct linkage between the material base of the production process and the continuation and adaptation of behavioural practice. For our purpose, we can thus discern in post-communist states a continuation of many of the ways and means of the ‘old order’ combined with the new. Formal arrangements often sit alongside informal. As Kapelyushinkov et al. (2011: 407) have outlined in the case of Russia and adherence to the Labour Code, ‘The formal rules are numerous and stringent but, unlike a co-ordinated market economy, their impact is marginal. The flexibility comes from the willingness and ability of both employers and employees to curtail their exposure to formal rules and rely on informal arrangements instead.’ This is especially important when we consider two important aspects of the organisation of working life, that of informal and illegal working. Unevenness produced by the predatory nature of neo-liberalism provides explanation for the persistence not only of lagged production growth but also increasing informalisation of the economy (Woolfson, 2007). In terms of informal working, Williams and Round (2007) provide sound evidence that informal working had always been a feature of the economy under the command economy and is now carried over in post transformation as custom and practice. Informal working may under the old order have supplemented formal employment, have been utilised as ‘off the books’ payment in ‘brown envelope’ bonuses or simply paid as favours akin to forms of mutual aid between individuals and households. We must also consider, as Clarke (2005) reminds us, under the command economy a large range of services (e.g. painting and decorating, TV and radio repair, care of elderly, etc.) were not provided by state-owned enterprise. ‘Informal’ working, when depicted by such tasks, was integral to the system. Informal working, as Williams and Round (2007: 2326) suggest, may thus be considered as a ‘core means of livelihood for a significant proportion of households’ that has since been carried over into the new order. Rather than being discouraged by a state’s entry into the world economy, the legacies of past practices of informal working are encouraged to expand. Round et al. (2008), in their study of employment practices for Ukrainian graduates, for example, find that informal methods of recruitment and selection predominate alongside the growth of informal working. Most notably, bribery and corruption is de rigueur within this subset of employment practices. Furthermore, while the Ukrainian government has taken steps to counter bribery and corruption, it has little effect other than

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driving up the price of bribes in reflection of the higher risks (cf. Jain, 2001). A related feature is that under communism, the black market economy created and sustained a market for shortfall products within the system. The black economy was, by definition, ‘off the books’ and more often than not involved in trading goods and services illegally. There emerges a distinct interplay between informal working and illegal working and between the grey economy of informal working and the black economy of illegal working. The operators of the black market under transformation conditions were well placed to take the economic and political opportunity to expand their trading relationships with the clientelist groups associated with the new ruling elites. The old nomenklatura and the penumbra mafia operators of the black market thus have a vested interest in blocking any ‘reform’ of the economy constructed in regulatory form. The two social forces combined to preserve their position within the new market-based economy. This complicity with, and sometimes integration into, the state machinery regularises irregularity and ensures the continuation of old habits alongside attempts to introduce new regulatory regimes based on the Western ideal. In conclusion, we can begin to appreciate that rather than being a temporary dysfunction, wild capitalism emerges as the normal modus operandi of post-communist transformation. Orthodox prescriptions merely exacerbate the problems of wild capitalism by opening further the doors of irregular market behaviour and blocking the possibility of economic convergence. Most importantly, in terms of structure, the process of transformation remains inextricably linked to a particular model of labour exploitation that feeds more general economic asymmetries between East and West. Having presented this overview of the general problems of transformation, we now turn to the particular problems of Yugoslavia and Serbia. The break-up of Yugoslavia and its economic consequences Tito had held Yugoslavia together by ideological and political means. Ideologically, communism offered an alternative to ethno-nationalism, and Tito was willing to utilise control and authority through the League of Communists to prevent dissent. Politically, the Federal Republic was balanced by power sharing and cross-subsidy between the separate regions of Yugoslavia, even though great income disparities existed between regions. Tito’s death in 1980, however, opened up the possibilities of fracture as the Yugoslav economy was already burdened with US$20 bn. debt and was recovering from the oil price shock of the mid-1970s. Yugoslavia continued to develop significant external debt commitments in the 1980s, and the IMF had been active in enforcing conditionality on Yugoslavia in return for continued financial lifelines. In 1989, this conditionality, agreed with the

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Belgrade nomenklatura, included wage freezes, cuts in government spending and the elimination of socially owned, worker-managed companies. Chossudovsky (1997) observes that the ensuing social tensions, combined with the forced inability of Belgrade to continue to finance provincial social welfare programmes, were a key factor in the secessionist breakaway by Slovenia and the ensuing civil wars. This analysis is supported by Woodward (1995) who emphasised the long attachment Milošević had maintained with the banking world and marketisation. To quote her in full: Milošević’s victory over the Serbian League of Communists is often cited, because of the war and Western policy in 1991–94, as the beginning of the end of Yugoslavia. But this view was not shared by Western banks and governments, or by other departments of the US government. They supported him because he appeared to be an economic liberal (with excellent English), who might have greater authority to implement the reform. Although Western governments were later accused on complicity, or foolishness in the extreme, Milošević was an economic liberal (and political conservative). He was director of a major Belgrade bank in 1978–82 and an economic reformer even as Belgrade party boss in 1984–86. The policy proposals commissioned by the ‘Milošević Commission’ in May 1988 were written by liberal economists and could have been a leaf straight out of the IMF book. It was common at the time (indeed into the 1990s) for Westerners and banks to choose ‘commitment to economic reform’ as their prime criterion for supporting East European and Soviet leaders (as well as in many developing countries) and to ignore the consequences that their idea of economic reform might have on democratic development. The man who replaced Janos Kadar as leader of Hungary in May 1988, Karoly Grosz, was similarly welcomed for the same profile of economic liberalism and political conservatism–what locals at the time called the Pinochet model. (Susan Woodward, The Balkan Tragedy, pp. 106–7)

Two regions, polarised at either end of the income spectrum, became the focus of the fracture. First, Slovenian political leaders, recognising that Slovenia had only 8 per cent of the Yugoslav population but 20 per cent of the national income, began to look for an alternative economic programme that would release them from the pressures of servicing the debt of the poorer regions. Second, a nationalist cause for Serbia developed from events within Kosovo, where Albanian interests were dominant and where demands for a separate republic were crushed by Serbian police. The eventual secession of Slovenia from the federation, combined with the toxicity of nationalism elsewhere, proved too much for a Titoist state without Tito, and the tragedy of the civil wars ensued. The civil wars deeply traumatised the regional economy. This was particularly the case in Serbia. By 1999, the economy had shrunk to half the

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size it had been a decade earlier. The economy was adversely affected not only by the civil wars but also the NATO bombings and the period of international economic sanctions lasting three years from 1992 to 1995. Added to this was the loss of markets to other regions of the former Yugoslavia during the Miloševič era. The break-up of the state of Yugoslavia had left Serbia with an accumulated public debt in 2000 of 14.17 billion euro, equivalent to 169.3 per cent of GDP (Serbian Ministry of Finance).3 For most of the working population, the legacy of the Miloševič years and the associated debt proved nothing short of disastrous. We can begin to analyse in more detail the problems facing the Serbian economy after the October 2000 Revolution and the strategies utilised to deal with the problems. First, it is important to examine the conditions within the labour market. Second, we consider the industrial strategy of the Serbian government in terms of privatisation and FDI. We further consider the influence that external agencies such as the international financial institutions and the European Union have in shaping developments. Considerable variation exists in the labour markets and general economies of the new countries of the former Yugoslavia which have already been identified by Arandarenko (2004). This variation reflects different levels of success in sustaining economic growth but also reflects in built regional inequalities of wealth that existed historically within Yugoslavia. As can be seen in Table 3.1, levels of GDP per capita vary enormously across the region, with Slovenia the richest nation and Bosnia and Herzegovina (BiH) and (the former Yugoslav Republic of) Macedonia the poorest. Across most of the region (apart from Slovenia), industrial production struggled to reach the levels of the pre-conflict period, unemployment remains high and the informal economy has mushroomed. As might be expected, falls in industrial output throughout the former Yugoslavia were particularly acute in the period during and following the civil wars. Between 1989 and 2003, real gross industrial output in BiH (excluding Republika Srpska) fell by 86.5 per cent, by 48.3 per cent in Croatia, by 61.2 per cent in Serbia and Montenegro and by 54.5 per cent in Macedonia (UNECE Common Database). Within the same countries, total employment fell over the same period by 39.6 per cent in BiH, by 26.7 per cent in Croatia, by 21.9 per cent in Serbia and Montenegro and by 48.2 per cent in Macedonia. The degree of decline was worse in the former Yugoslavia than in comparable postcommunist states as it has been accompanied by debt overhang, making possibilities for internally led and funded regeneration more remote and reliance on either FDI or IFI finance more important. Workers’ inward remittances remain an important source of income across the region, sometimes outstripping the net value of both FDI and externally funded loans and grants.

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(1,480) 6,600

(21,227) 36,329 43.1 na na

10.0 (17) 16

Unemployment % [ii]

High-technology exports (% of manufactured exports) 2005

GDP per capita, purchasing power parity (PPP)(current US$)

(4) 5.5

(2) 1.5

GDP growth (annual %)

(3.9) 4.6 (5.4) 30.3

(306) 314

(2001) 2010

(2001) 2010

GDP (current US$ billion)

Population, total million

Bosnia and Herzegovina

EU Eurozone

(10) 12

17.6

(4,390) 17,400

(4) –1.4

(19.8) 78.1

(4.4) 4.4

(2001) 2010

Croatia

(1) 1

32.3

(1,710) 9,700

(–5) 0.7

(3.4) 20.0

(2.0) 2.0

(2001) 2010

Macedonia, FYR

Table 3.1 Selected economic indicators: Western Balkans

na na

17.2 (Serbia)

(1,290) 10,900

(5) 1.8

(11.6) 80.1

(5) 5

10.7

(10,410) 28,200

(3) 1.2

(19.8) 56.6

(1.9) 2.0

(2001) 2010

(2001) 2010 (Serbia only) (8.1) 7.3

Slovenia

Serbia and Montenegro [i]

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(12.0) 60.7

1.5

29.0 (2008)

(2.5) 9.7

1.9

34.1 (2007)

Long-term debt (DOD, current US$ billion)

Workers’ inward received remittances (US$ billion 2010) USA (for comparison) 40.8 (2006)

(0.11) 0.13

(0.64) 0.55

Official development assistance and official aid (current US$bn) 2005

39.0

0.4

(1.3) 3.7

(0.25) 0.23

(0.4) 1.0

26.0

4.9

(6.8) 33.3 (including Kosovo)

(1.3) 1.1

(0.2) 1.5

28.4 (2008)

0.3

na 51.6

(0.13) na

(0.5) 0.5

Sources: World Bank, 2010. World Development Indicators 2010; UNDP Human Development Reports 2001, 2006. CIA World Factbook, World Bank Migration and Remittance Factbook, 2011 Notes: [i] Excluding Kosovo [ii] Unemployment rates are official figures; actual unemployment may be less due to presence of informal/ grey economy. [iii] The higher the coefficient, the greater the income inequality

Gini coefficient for income [iii]

(1.3) 1.8

(0.1) 0.3

Foreign direct investment, net inflows (current US$ billion) 2005

56

Workers and revolution in Serbia Table 3.2 Gross domestic product (GDP), Serbia 2000–10

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

GDP (US$ billions) 8.7 11.5 15.3 19.8 23.8 25.3 29.7 39.9 50.0 42.4 38.7

GDP growth rate (%) 4.5 4.8 4.2 2.5 8.2 6.0 5.6 7.1 5.6 –4.0 1.8

GDP per capita (US$) 1,160 1,536 2,036 2,640 3,186 3,408 4,009 5,387 7,054 5,742 5,233

GDP (PPP) per capita (Geary–Khamis $) 5,713 6,177 6,512 6,857 7,638 8,357 9,141 10,071 10,792 10,540 10,830

Source: IMF World Economic Outlook, 2011

The Serbian economy For Serbia (Table 3.2), there was steady growth of GDP from the October 2000 Revolution until the 2008 financial crisis. The pre-crisis growth was stimulated by free trade agreements with both the European Union and Russia. FDI into the country also fed some growth, increasing from a total of 0.01 US$bn in 2000 to a peak of US$4.29bn in 2006.4 However, in comparison with other transformation countries, the Organisation for Economic Co-Operation and Development (OECD) noted that ‘Serbia lags several years behind … Economies like Hungary, the Slovak Republic and the Baltic States, which in 1990 appeared about as productive as Serbia, are now generating much higher per capita incomes. Serbia has also fallen behind the previously less developed economies of Poland, Romania and Bulgaria’ (OECD, 2008: 17). The reasons for this lag may partly be the ‘pariah’ status that has continued to hang over Serbia, as well as the lack of progress towards EU membership. Sources of FDI within Serbia are focused on West European countries. However, other investment comes from the USA and Russia, and more recently from India and China. The major foreign-based investors include US Steel, Philip Morris, Microsoft, Coca-Cola, Siemens and Carlsberg, while the Russian-based Lukoil and Gazprom have invested heavily in the energy sector. In the retail sector, a number of multinational stores have set up shop, including Mercator (Slovenia), Intermarche (France), Metro Cash and Carry (Germany) and Veropoulos (Greece). In the financial services sector, major overseas banks with new establishments in Serbia include

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Banca Intesa (Italy), Credit Agricole and Societé Generale (France) and Erste Bank (Austria). Serbia remains heavily dependent on imported oil and gas, and in 2008, a deal was signed between the presidents of Serbia and Russia, Boris Tadic and Dmitry Medvedev whereby Gazprom’s oil arm Gazprom Neft gained a majority stake in state-owned petroleum industry. As a part of the deal, a 400-km long section of the South Stream gas pipeline will be built through Serbia to the value of 2 billion euros (Rianovostni, 2008). In 2007, a pre-financial crisis deal was struck with the Indian group, Embassy, to construct a technology park in Indjija near Belgrade which is predicted by officials to be capable of employing 25,000 over the following five years. However, despite the limited progress in attracting FDI, the economy has been devilled by underlying problems which have steadily worsened. In particular, growing national income has masked a problem of low internally driven capital formation and growing national debt. These problems have been exacerbated by the imbalance between imports and exports, as increasing consumer demand has tended to go towards imported products and services. The total monetary value of exports has continued since 2000 to be about half that of imports, and as a result, as Table 3.3 indicates, this has exposed Serbia to an increasing balance of payments deficit. This precarious state of Serbia’s balance of payments has meant that the country has consequently been faced with a continuing problem of debt servicing, a weak currency (dinar) and potential inflation. By 2011, accumulated private sector debt stood at US$ 12.5bn and public sector debt at US$7.5bn.5 Serbia has sought to accommodate this debt by building up its foreign reserves, by selling state assets through privatisation and by obtaining loans and grants from international financial institutions such as the World Bank, the International Monetary Fund and the European Bank for Reconstruction and Development. We deal with the consequences of this in the next chapter. The labour market in Serbia The major labour market problem in Serbia remains the high level of unemployment and high concentrations of poverty. According to the precrisis Serbian Labour Force Survey in 2008, general workforce participation rates were already comparatively low, with only 37 per cent of the total population declaring themselves as economically active.6 Apart from the negative effects of the financial crisis, falling birth rates and an ageing population are likely to exacerbate the problem in the foreseeable future. The industrial structure of the labour force exhibits a relatively high rate of workers employed in agriculture and forestry (24 per cent), compared to

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4,261 –2,540 40.4

3,330

–1,772

46.8

5,614

2,075

2002

37.0

–3,539

Source: Statistical Office of Serbia, 2010

1,721

1,558

Exports (mil. US$) Imports (mil. US$) Trade balance (mil. US$) Exports/imports (%):

2001

2000

Year

33.8

–4,856

7,333

2,477

2003

32.8

–7,230

10,753

3,523

2004

41.1

–6,022

10,575

4,553

2005

Table 3.3 Trade balances

48.8

–6,744

13,172

6,428

2006

47.6

–9,729

18,554

8,825

2007

48.0

–11,902

22,875

10,973

2008

52.0

–7,712

16,056

8,344

2009

58.5

–6,939

16,734

9,794

2010

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manufacturing (18 per cent). Employment share in agriculture has been falling in recent years, while the service sector has been growing. One quarter of all workers in 2008 were employed by the state, and 2.4 per cent are still employed in socially owned enterprises. The major sectors of private manufacturing employment are pharmaceuticals, agricultural machinery, electrical and communication equipment, paper and pulp, lead, transportation equipment and food. The low rates of economic participation and high rates of unemployment are masked by the informal or grey economy. Informal work in Serbia is concentrated in the agricultural and private service sector (retail, hotels and catering, etc.). According to trade union surveys of informal work, the textile industry is also a ‘hotspot’ of informal working.7 The share of employment in the informal sector is growing and increased from 30 per cent in 2002 to 34 per cent in 2003.8 In terms of active labour market policy, the European Training Foundation (ETF) notes that ‘the long years of disinvestment in new technologies and modern methods of work organisation within enterprises, involvement in subsistence agriculture and informal sector activities, suggest that a large section of the labour force may have the formal qualifications but not the updated skills necessary for a market-based economy’ (ETF, 2006: 4). In Titoist Yugoslavia, much vocational-based training was undertaken by a network of workers’ and peoples’ universities. In 1990, about 200 existed, but since then the infrastructure has all but collapsed, and only about 20 survived across the whole region into 2008. Lack of resources also hamper the efforts of the Serbian government’s own training agency, although efforts have been made to design training programmes considered important in the new market economy, including schemes part funded by the EU and World Bank to train redundant workers and to boost school infrastructure. The National Employment Strategy for Serbia is the co-ordinating mechanism for new initiatives, which include special provision for those disadvantaged or discriminated against in the labour market such as the Roma people or the disabled. In 2002, there were over 800,000 people living below the national poverty line, representing 10.6 per cent of the population, with a monthly income of under US$72, which corresponds to less than US$2.4 per day (ETF, 2006). However, growing real wages for the employed has been largely responsible for lowering the pre-crisis poverty rate to 8.8 per cent in 2007 (World Bank, 2008a). Regional income disparity is common to many transformation states who have adopted the pensée unique of privatisation and market liberalisation in the new global economy. Older, underfunded or state-subsidised industries contract as Western-based multinationals move in to dominate market opportunities. The withdrawal of state subsidies (often for state-owned enterprises) also leads to enterprise collapse, which

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may have devastating consequences for micro-regions dependent for income and employment on those enterprises. The United Nations Human Development Report for Serbia showed that the Gini coefficient for income inequality increased considerably in the years immediately following the October 2000 Revolution, from 28.3 in 2000 (similar to Germany’s) to 34.1 in 2002 (higher than Poland’s) (UNDP, 2004) before falling back again to 26.0 in 2008. Within Serbia, poverty appears concentrated in the former big industrial and mining centres (Kragujevac, Niš, Vranje, Bor, Majdanpek) and in the south of Serbia. The United Nations Human Development Index for the city of Belgrade was 0.826 (similar to Latvia’s or Bulgaria’s HDI) and another four districts (Severnobacki, Srednjebanatski, Zajecarski and Nisavski) were in the 0.782–0.826 range, but in the Pcinsky district the HDI was only 0.663 – slightly above Tajikistan’s and below the HDIs for Moldova and Kyrgyzstan (United Nations, 2005). There is a distinct urban–rural split in terms of poverty. Poverty rates in rural areas (where just under one half of the country’s population resides) are double the rates in urban areas. Serbia is also facing challenges of integrating 139,180 refugees and 208,000 internally displaced persons from the years of civil war – among whom poverty rates are four times higher than national averages (Pagliani and Vrbensky, 2006). Poverty levels are also higher among the Roma and Albanian minorities, who have much lower education levels than average and who suffer discrimination within employment. Unemployment among Roma people in 2004 was estimated at 46.1 per cent (compared to 15.5 per cent for non-Roma), while 61.2 per cent of Roma were living below the poverty line (compared to 10.6 per cent of nonRoma) (UNDP, 2004). Official data states that total unemployment in 2010 was in the order of 17 per cent of the 3.26 million labour force. It is likely that this is a considerable under-recording of the real picture as individual’s recording 10 days work over the last year are not counted as unemployed in the official statistics. Real unemployment is likely to be much higher (with some unofficial surveys recording as high as 50 per cent). Most dramatically, the numbers of people employed have fallen from 2.36 million in 1997 to 1.77 million in 2010 (National Bank of Serbia). Unemployment is especially concentrated among young people, with 90 per cent of school and college leavers waiting more than five years for their first job. Half of all 18–29-year-olds were unemployed in 2008. Such high unemployment among young people has led to an observed phenomenon of ‘life procrastination’ whereby ‘youth’ extends to the age of 29 and beyond. In such fashion, for the majority of young people, the lost decade of civil war and sanctions under Milošević has been followed by a wasted decade in his aftermath. This extended period of lack of opportunity is likely to create general anomie within Serbian society, with all its associated dangers of

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nationalistic tension and alienation, as well as suppressed demand to leave the country in search of a better life elsewhere. Data from the Serbian 2002 National Census suggest that at least 400,000 Serbian citizens are working abroad, mostly in Germany, Austria and Switzerland, but this is likely to be an underestimate. Remittances from this diaspora are extremely important, amounting to approximately 10 per cent of GDP (OECD, 2008: 26). Government economic strategy Successive Serbian governments since 2000 have pursued orthodox neoliberal policies. This orthodoxy proclaims opening markets to FDI and the removal of supply-side ‘rigidities’, through privatisation of state assets and the deregulation of labour markets. Such neo-liberal prescription, it is suggested, can deliver investment, technological innovation, productivity and thereby growth and prosperity (de la Dehesa, 2006). The prescription is based on the Heckscher–Ohlin–Samuelson trade model, whereby opening markets to FDI flows should enable economies with low levels of savings and capital formation to modernise and converge with more developed economies by developing competitive advantage in international trade. In reality, the ‘FDI model’ in Serbia has led to a credit- and import-led model of economic growth that has failed to improve the competitiveness of the export sector or create real demand as expressed in investment in fixed capital. Instead, it has spawned a highly unstable cyclical form of growth that is completely dependent on constant inflows of cheap credits. First, at the level of macroeconomic policy, there has been a focus on control over the money supply and targeting inflation, which in July 2011 remained stubbornly high at 12.1 per cent year on year, having fallen from a peak of 15 per cent a few months earlier. Interest rates have stayed relatively high over the whole post-2000 period (in comparison with European Central Bank rates) to prop up the foreign exchange value of the dinar and thus to keep down the cost of imports, thus targeting inflation. High interest rates have also attracted foreign credits, enabling the National Bank of Serbia to build up foreign currency reserves to maintain foreign exchange liquidity and pay for imports. Total foreign exchange reserves in 2010 stood at nearly 10bn euros compared to less than 2 bn in 2001.9 Second, fiscal policy has been geared to improving state finances through privatisation and FDI receipts. However, the influx of foreign credits, half of which were debt-creating, led to the surge in imports as aggregate demand far outpaced domestic supply. Rising imports then led to widening trade and budget deficits and a return of the inflationary pressures that were the target and rationale of monetary policy. In this way, the ‘strong dinar regime’ constantly generated inflationary pressures that put downward pressure

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on the value of the dinar. And so we have seen cycles (roughly between 2000–03, 2004–06 and 2006–08) of monetary tightening followed by fiscal loosening, followed by monetary and fiscal tightening to control inflation and repay external debt, in turn necessitating fiscal loosening to maintain aggregate demand, thereby opening a new cycle of debt-led growth and ballooning deficits. As such, we can discern a lack of sustainability in the Serbian economy, fed by over-reliance on credit, an imbalance between exports and imports and continuing structural inefficiencies producing high unemployment. The FDI regime generated persistent external deficits partly financed by rapid accumulation of private external debt, which more than doubled from 2005 to 2007, climbing to 37 per cent of GDP by October 2007. A constant stream of debt-creating credits has aggravated the fundamental structural imbalance between spending and saving, reflecting a lack of investment in the real economy. While credits have enabled a nominally high rate of growth of exports, they did so by paying for a rate of imports twice that of exports. In other words, the dependency of industry of foreign inputs meant that industrial expansion was itself a driver of the balance of payments deficit. Liberalisation and FDI contributed little to restoring the international competitiveness of a weak export sector (only 27 per cent of GDP in 2006). Indeed, in 2007–08, the non-tradable sector (wholesale and retail trade, transport and communication, financial services) accounted for nearly all growth. Moreover, the manufacturing industry has accounted for a declining share of GDP, its contribution of 1.3 per cent to the annual GDP growth rate of 8.2 per cent in 2004 falling to 0.7 per cent of a growth rate of 7.1 per cent in 2007 (all preceding data from the Statistical Office of the Republic of Serbia).10 Foreign debt has not primarily financed an investment boom but, with national savings declining, instead supported high consumption relative to income levels and opened up a current account deficit that leaped to 18 per cent of GDP in 2008. We can suggest that these outcomes indicate that the neo-liberal project has failed in its own terms. Predictably, the IMF and their local interlocutors claim that the problem lies in the failure to fully adopt the neo-liberal package: more structural reform (privatisation of the state sector) and fiscal tightening (e.g. cutting public sector wages and pensions) are necessary. Despite the neo-liberal rhetoric about fiscal rectitude, it is arguable that the debt-led model of growth depends on levels of expenditure and consumption that exceed levels of income. Foreign credits stimulate demand which creates further demand for increasing levels of credit to finance consumption. This partly accounts for the otherwise inexplicable fact that average net wages (corrected for inflation) grew at a rate of 10.44 per cent between 2004 and 2008, despite the fact that there were no appreciable

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gains in labour productivity (Statistical Office of the Republic of Serbia, 2008).11 Indeed, unit labour costs increased by 39 percentage points between 2000 and 2009, before falling back dramatically in 2010.12 Of course, in a highly competitive political situation, political parties and governments have not been willing to suppress wage growth at the expense of possible electoral failure. It might also explain why pensions have been indexed to wages – the average annual net growth was 9.2 per cent in the same period – despite the fact that state pensions are a particular bête noire of neo-liberalism. In such a fashion, cycles of fiscal loosening, where the state not only maintained subsidies and employment in the public sector but even presided over inflationary hikes in public sector wages and pensions, were the necessary counterpart of the credit regime and were required, in the absence of capital investment, to absorb FDI receipts through consumption and imports. Poverty and unemployment increase once more But increasing real wages did not signify a long-term trend towards growing levels of prosperity. After 2003, unemployment remained stubbornly high, with continuing falls in industrial production and levels of employment. West European living standards are a million miles away from the lives of ordinary people. While real net wages increased from a very low point, real purchasing power when set against a fragile dinar provides just about enough for basic survival, the average monthly salary just about covering the average monthly basket of goods from 2002 to 2008. After the 2008 financial crisis, the growth in real wages also went into reverse, as the real net wage fell by –0.7 per cent in 2009 and a further –1.2 per cent in 2010 (IMF, 2010: Table 3, 25). More than 400,000 jobs were lost in the immediate aftermath of the financial crash, and the rate of unemployment rose rapidly from 14 per cent in 2008 to 20 per cent in 2010. While absolute poverty declined from 10.6 per cent of the population in 2002 to 6.6 per cent in 2007, the rate also rose again after 2008, to reach 8.8 per cent in 2010 (World Bank, 2010). The unemployed and pensioners have suffered even more. OECD data indicates that each population decile in Serbia spends 40 per cent of its income on food, with the top decile spending 25 per cent. This compares to an average household expenditure in West European countries of about 15 per cent (OECD, 2008: 20). The 2008 crash was also accompanied by rapid depreciation in the value of the dinar, which fell by over 30 per cent against foreign currencies to reach 100 dinars to the euro in May 2010. This in turn would have had a further negative impact on ordinary householders’ ability to purchase basic items as the declining dinar fuelled higher prices of imported goods.

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We now turn away from these problems of poverty, unemployment and jobless growth to examine the social and economic dislocation caused by the process of privatisation within the country. Privatisation and wild capitalism in Serbia Privatisation has thus been seen as the exit strategy for the Serbian government out of debt and unsustainable balances of payments crises. However, as we hope to show, privatisation itself has brought many problems in its wake. Efforts to privatise Serbian enterprises were undertaken by the Miloševič regime. Laws to allow privatisation were passed in 1989, 1990 and 1994 and strongly favoured domestic investors and employees through a system of preferential discounts on shares. An estimated 50 per cent of socially owned capital had been privatised under this process by 1994 (Bukvić, 1994). Enterprises not ‘fit’ for privatisation were liquidated, adding to the general problem of capital reduction in Serbia. However, not until 1997 did a law come into force that opened the path for foreign investors to purchase enterprises. The later legislation also restricted insider ownership to existing employees and pensioners of enterprises, and this, Ristić (2004: 123) argues, created some hostility to privatisation from the excluded sections of the population. Concern was expressed that managers of previously ‘failing’ enterprises could remain in charge through shareholding options, with potential attendant problems of transparency. The 1997 law allocated 60 per cent of the shares to workers in state-owned enterprises as was part of the process of downscaling the system of self-management. In effect, a ‘nomenklatura’ form of capitalism was consolidated under Miloševič as the privatisation process gathered pace. This was partly a result of managers of enterprises deliberately running down enterprises and creating losses in order to buy them up cheaply. As Obradovič (2007: 50) has graphically recorded: With the withering away of the formal economy rose the speculative economy, financed through the transfer of social capital in a visible or less visible manner to the pockets of the ‘nomenclature elite’ and through the indirect state-sponsored robbing of the population. The basis of the speculative economy was ‘trade’ (smuggling) of oil, cigarettes, foreign currency, drugs and arms. By abusing its position, the ‘power elite’ in Serbia (bureaucratic, military and economic-technocratic) was the main organiser of the criminalised economy, from which it derived, for Serbian circumstances, huge profits and accumulated capital. The owner class, the ‘nomenclature elite’, which started to get rich during self-management socialism through so-called ‘useful malfeasance’, continuing through the criminalised economy in conditions of the systemic crisis of society … had already become the dominant social actor in Serbia at the beginning of the 1990s.

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Indeed, the problem of insider dealing has been a contentious issue throughout transformation economies and as such is not confined to Serbia. In Serbia, this has a distinct form as many privatised concerns passed directly into the hands of key members of political parties. Pesic (2007: 16) records, ‘The 17 biggest companies founded by the government of Serbia are managed by the parties that comprise the ruling coalition at the national level – the managing boards, presidents and directors – are compiled and by a quota-system are divided up among each of the parties of the ruling coalition which appoint the management positions as if the companies were their own property. All other public companies – about 500 – are in the hands of the ruling coalitions at the local levels’. The situation in Serbia appears worse in measurements of corruption than in most comparator countries. The Corruption Perception Index (CPI), produced by Transparency International, scored 3.4 in Serbia compared to rates of 3.8 in Romania, 4.4 in Croatia, 6.7 in Slovenia and 5.1 in Hungary (higher scores indicate less perceived corruption). In 2008, Serbia was ranked 85th in the CPI scores out of 180 nation states. For comparator purposes with western Europe, the UK was ranked 16th with a score of 7.7, and Finland was ranked 5th with a score of 9.0. A similar pattern can be discerned from the World Bank’s indicators of the ‘rule of law’ (defined as ‘the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, the police and the courts, as well as the likelihood of crime and violence’). The measure is from a point range of –2.5 to +2.5 with positive scores indicating greater regard and enforcement of the law. Again, in 2008, Serbia received a score of –0.46 which was a lower score than major comparators such as Slovenia (+0.91), Hungary (+0.82) and Croatia (+0.08) and was the lowest score in the former Yugoslavia. The US score in the same year was +1.65 and New Zealand +1.85 (all data from Kaufman et al., 2009). Yet more privatisation Notwithstanding the difficulties after the fall of Miloševič, the new Serbian government began a more thorough process of privatisation with a twofold aim. First was the integration of Serbia into the world economy on a competitive basis by restructuring of enterprises deemed to be unproductive or inefficient. Second, as we have already indicated, the new government wished to pay off accumulated public debts, and the sale of state-owned enterprises to foreign buyers would go some way to satisfy this objective. The first privatisation law after the October 2000 Revolution was enacted in 2001 and enabled the privatisation of all ‘socially owned capital’, as opposed to the existing state-controlled public services and enterprises.

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A stipulation that social welfare programmes should be attached to the privatisation was included in the legislation. Privatisation, in this instance, followed the model of tender in order to gain new majority owners, who might be domestic or foreign individuals. With both forms of privatisation – insider share-ownership and open-tender – concerns were once again raised about the ability of individuals to obtain property at bargain prices through a combination of legal and illegal means. Initially, 4,500 enterprises were targeted for privatisation, which were expected to rise to about US$150.3m. Between 2002 and 2004, over 1,100 enterprises, employing over 150,000 employees, were sold off (Ristić, 2004: 126). Key early sales were those of steel works (to US Steel) and breweries, tobacco manufacturers and petrol stations. The Slovenian company Mercator has also bought up many retail establishments and stores. Full privatisation of the Serbian telecommunications network proved difficult because of problems of infrastructure. In 1998, 49 per cent of shares were sold off to Italian and Greek telecom operators, but rather than improving the infrastructure and inefficiency, the motive appeared to be entirely to aid reduction of the budget deficit (Begović, 2000). Substantial new privatisation agreements were struck in 2006, including the sale of the mobile telephone operator Mobi 063 to Telenor of Norway for €1.5bn, the purchase of the Vojvodjanska Banka by the National Bank of Greece for €360m and the takeover of Hemofarm by the German company Stada for €475m. In 2009, in a newly hostile post-crisis period, the Serbian Privatisation Agency still had 2,145 enterprises listed for privatisation on its website and was engaged in a renewed programme of privatisation designed to raise a further US$45bn.13 The government ‘wish list’ for privatisation includes the state airline, JAT, and the state-owned airports. Ten per cent of the assets of privatised companies were due to be distributed as shares (worth US$1,500) for each member of the population. The timing of this distribution is significant, as it came at the height of tension over the future of Kosovo, and distribution of shares to Kosovo Albanians (still technically citizens of Serbia) may have fulfilled a useful political manoeuvre by the Belgrade government. Many smaller- and medium-sized enterprises in the ‘socially owned’ sector have been sold to domestic investors. The large but troubled Zastava arms and automobile combine had for a number of years been linked with various European car manufacturers with a view to establishing either a full-sale or a franchise/joint-venture arrangement. The car factory was heavily bombed by NATO forces, and workers formed a live shield around the plant in its defence. In two nights of bombing, 160 workers were injured and 160,000 square metres of factory floor space was destroyed.14 In July 2008, just as the financial crisis was peaking, a memorandum of understanding was struck with Fiat who agreed to invest €700m in return for a

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70 per cent stake in the company. Interestingly, this proposed deal marked a return to earlier agreements first begun between Fiat and Zastava in 1954 under the Titoist regime, when the popular Fiat 600 car was built in the factory. The likelihood of further sales of state-owned enterprises was seriously diminished by the financial crisis, even if shares were to be sold at undervalued asset prices. The effects of the global financial turmoil were graphically shown in January 2009 when the Economy Minister Mlađan Dinkić announced that the Fiat–Zastava deal would be put on hold as a result of the financial crisis, with a ten-month postponement of the contract.15 The Serbian Privatisation Agency also reported in August 2009 that a quarter of privatisation contracts had fallen through as new owners failed to honour the deals. We have noted that the economy of the former Yugoslavia was plagued by problems of public and private debt. Such problems have clearly carried over into the post-2000 new state of Serbia. The Serbian government’s response to the debt problems has been to seek to attract FDI; to alleviate debt by negotiating debt relief, but then borrowing more from the international financial institutions; to correct budget deficits by the sale of state assets; and to build up substantial reserves of dinars in order to service debt. The economy began to expand from its poor base in 2000 and topped 5 per cent GDP growth each year until 2007. In 2006, the government scored a number of notable potential successes in its privatisation strategy. Real and nominal wages of the employed continued to fluctuate, but inflation within the system placed increasing strain on the unemployed and other economically inactive members of the population. However, the combined strategy, framed within a context of neo-liberal market mechanisms, appears not to have alleviated or solved the core problems of the economy. Serbia still has a relatively large and negative trade balance, reflecting poor performance of domestic industry. Debt continues to hang over the economy, and inflationary pressures continue to reduce the real value of the dinar on international markets. The financial crash of 2008 made matters much worse, whereby the privatisation process was thrown into crisis as potential investors withdrew or stalled on their intentions, corruption was revealed and both unemployment and levels of poverty increased. The continuing fragility of the economy presents us with a potential crisis of social solidarity. The Serbian government will no doubt seek to manage the crisis by shifting the burden of debt to workers in general through a combination of tax rises and public sector efficiency measures. However, such a prospect, when combined with continuing frustration at the privatisation process, will further fuel the potential for industrial unrest and social unrest. It is these internal societal divisions which we will examine in the following chapters.

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1 www.databasece.com/en/industrial-output-during-transition. 2 www.eurofound.europa.eu/areas/qualityoflife/eurlife/index.php?template=3 &radioindic=158&idDomain=3 accessed 5 April 2011. The Gini coefficient actually varies considerably within the EU 15, with the lowest ratio recorded by Sweden (0.23) and the highest by Portugal (0.41). 3 www.mfin.sr.gov.yu/eng/2724/ accessed 30 July 2009. 4 National Bank of Serbia Balance of Payments Statistics Division. 5 National Bank of Serbia http://www.nbs.rs/internet/english/index.html. 6 http://webrzs.stat.gov.r s/axd//en/dokumenti/saopstenja/RS10/ rs101022008.pdf. 7 http://209.85.229.132/search?q=cache:IvkeX5juLyMJ:perc.ituc-csi.org/ IMG/ppt/INFORMAL_ECONOMY_ANALYSIS.ppt+Serbia+Informal+Econom y&cd=1&hl=en&ct=clnk&gl=uk accessed 31 July 2009. 8 Living Standards Measurements Survey (LSMS) carried out by the Ministry of Labour in June 2002 and June 2003. 9 National Bank of Serbia www.nbs.rs/internet/english/80/index.html accessed 1 September 2011. 10 http://webrzs.stat.gov.rs/axd/en/index1.php?SifraVesti=320&Link= 11 Communication KS10 – http://webrzs.stat.gov.rs/axd/en/dokumenti/saopstenja/ KS10/ks10122008.pdf. 12 National Bank of Serbia statistics Table 26 Employment and Wages (2011). 13 www.priv.yu/pregled_preduzeca/pregled_preduzeca.php?jezik=english. 14 http://zastavanacionale.com/Default.aspx?lng=en-us&mode=about accessed 6 August 2009. 15 www.b92.net/eng/news/business-ar ticle.php?yyyy=2009&mm= 01&dd=20&nav_id=56553 accessed 6 August 2009.

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We cannot fully understand societal and economic development in Serbia without assessing the role of external agencies. Most notably, the international financial institutions (IFIs) have influenced economic policy in both the old Yugoslavia and then Serbia for more than three decades. We have shown elsewhere the debt burden gathered in Yugoslavia under the Tito and Marković regimes and how commentators have suggested that this debt burden was a major cause of the subsequent break-up of Yugoslavia into separate states (Woodward, 1995; Gagnon, 2004). The aftermath of the civil wars undoubtedly left Serbia in a worse position with respect to debt. In addition, and partly in response to its economic difficulties, Serbia’s application for accession to the European Union has also shaped developments at both the economic and political level. In this chapter, we first present an overview of the policy approach of the IFIs and their move towards a more participatory approach. We examine the overall influence of these institutions in the region as a whole before examining the specific impacts on Serbia. We then turn to examine the policy discourse surrounding Serbia’s aspirations to join the European Union. We view developments through the lens of the impact of policy on workers and their expectations for progress in achieving a better quality of life. The international financial institutions as a vehicle for neo-liberalism IFIs have played a crucial part in funding shortfalls of capital within regimes of weak internal capital formation. Low savings ratios in the post-communist states, combined with state and enterprise indebtedness, have meant that such economies have needed loans and grants to create conditions for economic growth. Joining and engaging with the IFIs, as well as the World Trade Organisation (WTO), has also been integral to the ‘transition’ to the Western-dominated global market economy. However, the conditionality attached to support from the IFIs has been framed by the dominant

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market-based imperative. In this framework, it is deemed necessary to clear the labour market of rigidities in order to encourage foreign direct investment and to ensure a positive environment for enterprise (World Bank, 2005a). Two thirds of the World Bank’s operations are linked to internal policy reforms, most of which shape the labour market, such as pension reform, labour code amendment or public sector restructuring and pay (EBRD, 2004; World Bank, 2004a). This process has serious implications for labour relations. This is because the dominant neoclassical model considers collective labour interest as a constraint to liberated labour markets (Hayek, 1980). Trade unions act as interest representatives to oppose labour market reforms that seek to liberalise protective labour codes. Unions will also use their associative power through the institutions of collective bargaining to raise the price of labour. As such, it can be predicted that the power expressed by unions will prove an obstacle to reform, and the scene will be set for contestation of key aspects of conditionality, bringing collective labour into dispute not only with the IFIs but also with their client states. The role of the IFIs, in this respect, has led Gradev (2001) to refer disparagingly to them in the case of transformation states as a ‘fourth actor’ in terms of their ability to shape the emerging industrial relations’ systems. While the relationship between organised labour and the IFIs over the recent past has been contested, from 1999 the policy approach of the IFIs shifted to a more consultative one contained in the ‘Second Generation Reforms’.1 The shift took place in the aftermath of the 1997 East Asian financial crash and is a response both to the global justice movement and to internal IFI concern at the seeming failure of policies to counter poverty and economic inequality. Gathering unease with the IFIs has been exacerbated by claims that the IMF and World Bank are experiencing a crisis of confidence (Ambrose, 2007), fed not only by their inability to address poverty but also by problems of shrinking demands for services and a rise in alternative sources of funding from private investors as well as newly industrialising countries such as China and India. The Post Washington Consensus (PWC) model offers new direction by seeking to engage with civil society organisations, including trade unions, in efforts to build the perceived necessary social networks vital to democratic civil society (World Bank, 2005b). Central to this approach has been social capital theory. Fukuyama, for example, when addressing an IMF seminar on the reforms, suggested that ‘the economic function of social capital is to reduce the transaction costs associated with formal coordination mechanisms like contracts, hierarchies, bureaucratic rules, and the like’ (Fukuyama, 1999). The phraseology suggests that the second generation of reforms is seen as a developmental tool set within a Weberian framework of state and organisational relationships.

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The neo-liberal theory of labour reform The IFI framework of economic development can be located in neoclassical endogenous growth theory (de la Dehesa, 2006: 10–15). The theory prescribes that economic growth is possible in developing economies if labour market rigidities are cleared to give maximum incentive for entrepreneurship and financial risk-taking on behalf of enterprises (World Bank, 2005a). It is then assumed that developing economies will converge towards developed ones through exploitation of comparative advantage and through imitation of best practice. An open economy is more likely to achieve best practice than a closed one; hence, alongside deregulation of labour markets, state policy should include liberalisation of external tariffs and financial controls. In order to attract and retain foreign direct investment, an important necessity when internal savings ratios are low, the role of the state should be reduced from its former preoccupations, implying privatisation of formerly state-owned functions, the marketisation of services and low taxation. A convergence ‘peak’ is postulated to which all economies can then transpire through best practice initiatives (Forteza and Rama, 2001). Incremental advances in growth to reach this ‘peak’ may also be dependent on endogenous factors, such as skill enhancement and technical innovation (Romer, 1986). This assumes an emphasis on supplyside solutions and the gradual emergence of competitive, rather than comparative advantage in international trade. Such theory has been central to IFI policy and practice in both transformation economies and the former Yugoslavia. The IFI view of the region of South East Europe, for example, is encapsulated in the World Bank’s report (2004a) on Building Market Institutions in South East Europe where it is stated: Achieving greater labor mobility and encouraging job creation will require that decisive steps be taken to improve labor legislation through-out the region. Deregulation, decentralization of collective bargaining to firm-level dialogue, improved flexibility of dismissal procedures, simplified wage adjustment and overtime pay, and introduction of fixed-term contracts are some of the reforms being debated to improve the transparency and functioning of the labor institutions in the region. Such initiatives, as well as formalization of the gray economy, are key to fighting the unemployment problem in the SEE8.

In commenting on the influence of the IFIs on government policy in the former Yugoslavia, Arandarenko (2004: 49) has argued that the IFI agenda had imposed itself not because of the terms of conditionality, but because: ‘In terms of articulation and elaboration – not necessarily in terms of content and prescriptions – the World Bank’s agenda is simply superior to others. World Bank messages are simple … and easily translated into

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workable action programmes’. Such an interpretation may be overly simplistic and too reliant on social capital reductionism. In a more sober analysis, Woods (2006: 63) has placed emphasis on IFI ‘groupthink’ in which ‘faith-based blindness’ and reliance on a ‘template’ lead to ignorance of local sensitivities and, more importantly, possible mistakes in the message. In other words, greater forces of political economy are at work to provide explanation of IFI dominance. For example, the IFIs have been accused by those from a neo-Gramscian perspective of producing a new ideological dominance. It is suggested that there is a collusion of new values grouped under the neo-liberal umbrella which closes down space for dissent. This pensée unique is expressed in concrete form by the IFIs and the asymmetric power they wield over transforming states subjugated by their dependence on IFI support. Such subjugation poses a problem for resistance as it is argued that a new ‘transnational class’ is created which has bought into (and been bought off) by the power of international finance (Van der Pijl, 1993, 1997). Within transformation states, this new ‘transnational class’ might even be the old elite who have conveniently reformed their ideology in an attempt, as Hankiss (1990) and Haynes and Husan (2002) have argued, to ‘step sideways’ from command to market economy. Of course, rather than being a unified transnational elite, individual state elites compete among themselves for a share of FDI and other external investment funds, but this process of competition only has the effect of pushing them even further down the neo-liberal road in a ‘race to the bottom’. Gramsci (referring to Italian fascism’s absorption of American management techniques) described such a process as ‘passive revolution’ or trasformismo, whereby a new order is created from above which crushes political or economic space for internal dissent and opposition (Gramsci, 1978, see also Cox, 1993; Morton, 2007). In other words, the IFIs might act not only as agents of Western economic dominance but also consolidate a new institutional architecture by ideological means, obscuring the reality of class conflict in the process (Upchurch and Weltman, 2008). A new civil society is created ‘from above’, which accommodates itself to the imperatives of neo-liberalism. This wide-ranging process of accommodation also has the capacity to infect alternative or competing social projects. Most tellingly, social democracy may be profoundly affected and mutates into ‘social liberalism’ in the field of social and industrial policy. The previous accommodation between state, capital and labour is tipped to the advantage of capital at the expense of labour and is accompanied by a withdrawal of the state from many of its previous welfare activities. Some argue that this combination of ideological imposition, power in practice, and the consequent global institutional architecture consolidates a new dominance of finance-based capitalism (Cammack,

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2002; Soederberg, 2002; Moore, 2005). However, some caveat needs to be expressed on this point, in that while the IFIs have created the new framework, the net outcome is not merely in the interests of finance capital but rather in the general economic and industrial interests of Western, particularly US-based industrial capital. In this sense, the IFIs are better seen as a conduit for Western capital interests rather than independent agents of finance. Dissent and a new participatory approach? Notwithstanding this, some evidence of a policy shift emerged from the decision on the part of the two major IFIs to declare poverty reduction to be their overarching goal at the annual meetings of the IMF and World Bank held in September 1999. Two subsequent key World Bank documents consolidate the new thinking, which was contextualised by the 1999 Seattle and other anti-globalisation protests. The first document emanated from the World Bank’s Social Protection Advisory Service as a discussion document in 2004 (Egulu, 2004). The paper, written by one of the ICFTU African representatives, focuses on the ‘weaknesses and shortcomings which have limited the effective participation of trade unions’ in the World Bank programmes and calls for ‘... more dialogue between the labour movement and the IFIs, strengthening trade unions, building union capacity and more analytical work on labor market policies and core labor standards’ (Egulu, 2004: Executive Summary). The concern about lack of trade union involvement followed an evaluative document of the World Bank of countries in transition, which noted the positive effect that trade union lobbying had on limiting corporate corruption so that ‘... greater emphasis should be placed on building local constituencies – not merely entrepreneurs, but workers and reform-minded politicians as well – capable of demanding further policy reforms’ (World Bank, 2004b: 20). Under the revised approach, recipient states are required to draw up a Poverty Reduction Strategy Paper (PRSP) to identify targets for poverty reduction outcome indicators. This is then translated into a Country Assistance Strategy (CAS), which includes country political initiatives in return for financial assistance. This runs in parallel with changes in the IMF, where in the field of macroeconomic fiscal and monetary adjustment, the former Enhanced Structural Adjustment Facility (ESAF) is now called the Poverty Reduction and Growth Facility (PRGF). The new approach is meant to have a wider rubric, inclusive of poverty reduction. The targets have now become conditions to be assessed by the IFIs to determine the country’s access to debt relief and loan support. In addition, the IFIs are anxious to encourage the involvement of both states and civil society organisations (CSOs) in drawing up the PRSP whereby both the IMF and World Bank stipulate that

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the PRSP is to be formulated by the borrowing government rather than by the IFIs. The World Bank approach to ‘civil society’ has been clarified in a second key document that includes both NGOs and trade unions within a ‘definition’ of civil society organisations (World Bank, 2005b). The document states that the Bank’s activities should include ‘facilitation, dialogue and consultation, and partnership’ (ibid.: ix). The report is clearly a response from the Bank to the global justice movement to which the Bank gives recognition. Some NGOs, however, have questioned the sincerity of the new approach. The European Network on Debt and Development, for example, after conducting a survey of PRSPs, found that while they do focus on safety net provision, the macroeconomic policy remains indistinguishable from the previous era.2 Őnis and Şenses have similarly argued: ‘The Post Washington Consensus represents a response by the dominant establishment to the deficiencies of the neoliberal agenda and an attempt by them to overcome such deficiencies through a set of reforms that takes the existing structures of power as given’ (2005: 285). Observers have criticised the degree of participation with civil society as ‘little more than consultations with a few prominent and liberal CSOs’ (Bello and Guttal, 2005: 6). Rodrik refers to the ‘augmented’ Washington Consensus in these terms: The trouble with the Augmented Washington Consensus is that it is an impossibly broad, undifferentiated agenda of institutional reform. It is too insensitive to local context and needs. It does not correspond to the empirical reality of how development really takes place. It describes what ‘advanced’ economies look like, rather than proscribing a practical, feasible path of getting there. In short, the Augmented Washington Consensus is infeasible, inappropriate, and irrelevant. (2002: 1)

The question then arises as to what degree has the new model of the IFI refined or advanced its role as a ‘fourth actor’ in labour relations? Is there real change from which trade unions and labour interests can seek to improve their position, or is the IFI strategy merely a cosmetic ‘flanking mechanism’ (Jessop, 2002) designed to incorporate and institutionalise worker opposition within civil society? However, early evidence from the (then) International Confederation of Free Trade Union (ICFTU) suggests that the new participatory approach of the IFIs has had little impact on trade union efforts to moderate or change intended labour market reform. A statement issued by the ICFTU and the Global Unions Federations (GUFs) in 2005 claims that ‘Although the IFIs frequently proclaim that the “Washington Consensus” of the 1980s and 1990s is dead, classic structural adjustment conditions continue to be attached to the HIPC (Heavily Indebted Poor Countries) programme and many IFI loans’.3 Giving the examples of highly indebted countries such as Zambia and Uganda, the report found that ‘In a recent survey of Poverty

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Reduction Support Credit (PRSC) loans granted by the World Bank to thirteen low-income countries, the European Network on Debt and Development found that in eleven out of the thirteen cases the Bank imposed privatization conditions. In some cases, the PRSC conditions contradicted policies adopted in government-prepared Poverty Reduction Strategy Papers (PRSP)’. It is not only highly indebted countries that appear to be suffering from continued neo-liberal prescriptions. The same Global Unions report concludes that in Turkey in May 2005. the IMF approved a new $10 billion loan which included 29 new financial and structural conditions, including the generation of a sizeable primary fiscal surplus, privatization of $1.5 billion worth of state-owned assets within eight months, placing strict controls on public sector hiring, undertaking a review of civil service wages, and adopting new pension and social security reform legislation. The IMF also called for “improved labour market flexibility”. (IMF, 2005a)

Additionally, an ICFTU survey of unions in the CEE and Newly Independent States (NIS) of the former Soviet Union in 2001–03 found that the IFIs do not operate ‘in an open, accountable, transparent way’ and that ‘although a certain level of participation of trade unions ... was achieved in the last three year period ... there is still a lack of consultative mechanisms’ (ICFTU, 2003: 7). Such IFI intransigence is located in the dominant influence of the World Bank’s Doing Business framework approach. The prescriptions emanating from successive Doing Business reports have stated that ‘rigid’ labour markets impede market competition. These messages pervaded the World Bank’s Doing Business rankings whereby content analysis was utilised to assess input indicators of labour market rigidity and barriers to entrepreneurialism. As expected, the indicators for ‘hiring and firing’ placed labour protection as a negative source of business efficiency and provoked hostile responses from trade union federations on a national and international basis.

The IFIs in the former Yugoslavia As we have already shown, Yugoslavia developed significant external debt commitments in the 1980s, and the IMF had been active in enforcing conditionality on Yugoslavia in return for continued financial lifelines. In 1989, this conditionality, agreed with the Belgrade nomenklatura, included wage freezes, cuts in government spending and the elimination of socially owned, worker-managed companies. Chossudovsky (1997) observes that the ensuing social tensions, combined with the forced inability of Belgrade to continue to finance provincial social welfare programmes, were a key factor in the secessionist breakaway by Slovenia and the ensuing civil wars. After the wars, the newly formed states were quickly reintegrated into the

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international financial community by becoming new members of IFIs and associated organisations such as the IMF, the World Bank, the European Bank for Reconstruction and Development (EBRD) and the WTO. The need for external financing to rebuild the shattered economies of the region was paramount, and reliance on the IFIs to help provide this funding was to the fore. Most of the focus of labour discontent with IFI pressured policies has been the rescindment of protective labour legislation. Government measures to introduce changes to labour codes, including protective arrangements for dismissed workers, have been a central feature in the transformation economies, including those of the former Yugoslavia. Examples gathered from documents of ICFTU and from interviews with trade union representatives in the region illustrate the difficulties where changed legislation has been contested by the unions with indirect or direct interference from the IFIs. Croatia’s first post-independence labour law was passed in 1996 and amended in 2001, guaranteeing the right to strike after unions have gone through dispute arbitration. However, new government proposals to change the labour law in Croatia flowed directly from a five-point reform programme announced by the World Bank in December 2001. The new law was proposed outside of the existing tripartite consultative structures and without any discussion or contact between the IFIs and the trade unions. It included reduced job security rights, reduced protection against dismissal, reduction of severance pay and elimination of tripartite negotiations for the minimum wage. Initial strikes against the proposals began in 2002 involving telecom and postal employees and health service employees. The proposals later provoked a joint union protest of the five union federations outside the parliament buildings in Zagreb in February 2003 and a threatened general strike but also led to a direct approach from Guy Ryder, the then ICFTU General Secretary, to the World Bank President James Wolfensohn in an unsuccessful effort to rescind the proposed law. The regional director of the Bank in Croatia had claimed in an article published in the Zagreb press that ‘within the EU the countries with the most flexible labour legislation had had the highest growth rates, while those with labour policies that provide for workers’ protection are among countries with the lowest growth rates’.4 The director subsequently met with the leader of the SSSH union federation (Union of Autonomous Trade Unions of Croatia) where the argument that labour flexibility was good for growth was repeated by the director. The IFI position was paralleled by the government after Deputy Prime Minister Goran Granic’s statement that the current labour law was one of the main obstacles to having more foreign investment. Under threats of further union action against the labour reforms, the government backed down

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and opened negotiations with the unions leading to a watering down of the original proposals in the bill. IFI involvement in drafting the new bill has always been denied by the IFIs themselves. Evelin Toth Mucciacciaro, director of international affairs at the Union of Autonomous Trade Unions of Croatia, however, asserts that the IFIs always claim that ‘changing the Labour Law was exclusively the desire of the Government’ (cited in ICFTU, 2006). More direct inference of IFI involvement is provided by Jasna Petrovic, the editor-in-chief of the ICFTU’s CEE Network Bulletin, who claimed in an article in 2002 that the World Bank had used an ‘American democratic foundation’ to ‘finance the assignation of a labour “expert”’ to the Croatian government’s Office for Social Dialogue’, where his first job was ‘to organise a meeting on amendments on labour legislation with arguments of Europeanisation and standardisation’.5 Evidence of IFI policy can also be gathered from IMF documents urging the Croatian government to give priority to pension and health sector reform and to ‘create appropriate regulatory frameworks’ for privatisation as well as ‘economywide wage restraint’ (IMF, 2001). In a document associated with a US$202 m. structural adjustment loan, the World Bank in its 2003 Country Economic Memorandum also suggested the need for labour market liberalisation to lower the cost of individual dismissals and lower severance payments and, more pertinently, to ‘decentralise and deregulate industrial relations’ and to ‘move away from industry level bargaining toward firm level bargaining’ (World Bank, 2003). The state of Bosnia and Herzegovina (BiH, generally referred to here as Bosnia) represents a complicated dynamic of change and development. The state remains divided into the two entities of the Federation of Bosnia and Herzegovina, and the majority Bosnian Serb Republika Srpska, plus the internationally supervised Brcko Distrikt. Bosnia joined the IMF in 1992 and the World Bank in 1993 from which it began receiving loans in 1996. Originally classified by the Bank as a post-conflict nation, it has since July 2004 been reclassified as a transition country. The unstable nature of the country resulting from the wars has meant the country is subject to considerable NGO activity as well as substantial assistance from the US government under the USAID programme. In fact, USAID is by far the largest financial donor and exercises considerable influence as a result, both by building infrastructure and encouraging ‘institution building’. Bosnia receives the lowest proportion of FDI per capita in the region and so is particularly dependent on IFI support. By 2005, Bosnia had received eight World Bank adjustment loans and was subject to forty-three investment projects totalling more than US$1 bn. At that time, Bosnia had loans still outstanding to the IMF of $99 m., which were subject to conditions to reform the credit and banking system. Both the IMF and the World

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Bank have also sought to reform the labour market. In a document relating to Bosnia, the IMF directors refer to the need for ‘... labor market institutions ... to be transformed to encourage job creation during and after the corporate reforms’. In this context, regulations allowing the indefinite accrual of wage rights, regardless of attendance for work, should be rationalised, and restrictions on the dismissal of workers relaxed. Directors were of the view that wage indexation should also cease, so as to moderate wage growth and engender a better balance between wage and employment growth (IMF, 2005b). The country was also subject to a 2004–07 CAS under the new World Bank approach, and hence ‘ownership’ of Bosnia’s associated PRSP is that of the government (rather than the Bank). In developing the PRSP, it should now be expected that the Bank’s new rubric of ‘facilitation, dialogue and consultation and partnership’ should be observed. The actual process of drafting the PRSP, published in 2004, did involve consultations with NGOs and government-related agencies.6 Some doubts have been expressed as to the value of the consultation process. For example, a report by the charity Save the Children states that it believes ‘... the BiH PRSP was written by consultants and is being withheld from public view’.7 A report prepared for the UK government Department for International Development (DFID) also referred to the European Union’s ‘concern at the (Washington-driven) proposed timetable ... that would result in a poor quality PRSP which donors could not coordinate’ (Coyle and Evans, 2003). As far as the trade unions were concerned, consultation meetings began in April 2002 when trade union representatives were consulted by the Ministry of Foreign Trade and Economic Relations. A number of further meetings with unions took place on a bilateral level before World Bank officials agreed to meet leaders of the three union federations (from the federation, republika and distrikt). At this meeting, on any contentious issue, the unions were told to ‘Go to your Government and discuss this’.8 This marked a change from when they had previously met the Bank to discuss the drafting of the 1999 Labour Law, when according to the regional officer of the ICFTU in Sarajevo, ‘World Bank representatives would leave the room and phone Washington to see if the proposals were acceptable!’ The first draft of the PRSP contained a chapter on labour market issues, including the intention to ‘ease minimum wage requirements and abolish the seniority salary supplement’. Despite union objections, the final version, issued in April 2004, contained the following statement: In the coming period, all levels of government in BiH will be required to drastically reduce public expenditures and particularly public sector wages. In this context, and in order to reduce existing wage system anomalies, it will be necessary to gradually reduce such benefits as hot meals, vacation subsidies and, at later stage, to eliminate compensation for past labor.9

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The three unions subsequently submitted a document commenting on the PRSP in April 2005 in which they outlined the case for continuing privatisation, process transparency, adequate social protection and workers’ rights.10 Outwith the PRSP, disputes over other substantive issues remained unresolved. The unions fell into dispute with the government over labour standards and called a joint protest demonstration outside government buildings in Sarajevo over the introduction of the 2004 Law on Bankruptcy and Liquidation, which reduced severance payments and job continuity rights. Most importantly, government proposals to ‘decouple’ the minimum wage from average earnings reflected the wider agenda on labour market reform proposed by the IMF. Trade unions in Macedonia found themselves in dispute with their government in 2001–02 over planned changes to the law on severance payments for workers made redundant from loss-making ventures. The union federation calling the dispute, the Federation of Trade Unions of Macedonia (SSSM), claimed that the old regulations had been ignored in a number of cases under direct pressure from the IMF. The SSSM met with government officials in January 2002 and called for direct negotiations with the IMF on the disputed payments and followed this request with a series of road blockades in the Skopje region led by workers from a number of local factories. The old legislation allowed older workers with over 25 years of service to receive special protection, the payment of due wages and contributions as well as more extensive rights for the unemployed. SSSM immediately launched initiatives for amendments to the relevant legislative provisions. Following the protests and blockades, another meeting was held with government representatives, but no progress on the issue of severance or on the meeting with IMF representatives was achieved. The SSSM then sought a meeting with representatives of the loss-making companies and announced a series of new protests. As with Serbia, the government of Macedonia decided to pay off its debt to the IMF in 2007. A similar protest was instigated by the trade union federation Confederation of Independent Trade Unions of Montenegro (SSSCG) in Montenegro over the drafting of a new labour law. The first draft had been agreed between the unions, the government and employers in 2001 and had gone to the Montenegrin Parliament for final approval and legislative action. However, progress on the new parliamentary bill was halted when the government claimed that it did not comply with various International Labour Organisation (ILO) standards. The bill was then redrafted to include new clauses encouraging flexibilisation of contracts designed, it was claimed by the government, to discourage informal working. These new proposals were aimed at reducing the value of severance payments and maternity leave and redefining the coverage of the legislation to include part-time work.

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The union federation claimed that the sudden change, conducted without union consultation and under the false guise of the ILO, was actually at the behest of the IMF, which was simultaneously negotiating the terms of a new loan to the Montenegrin government. In May 2002, the SSSCG consequently organised street protests and a petition opposing the new bill. Serbia and the IFIs The second strategy of the Serbian government after 2000 to confront the country’s debt problem has been to appeal for support to the IFIs. As a potential way out of the economic crisis following the wars, the Serbian government has been keen to co-operate with the triad of IFIs by both renewing its membership of the IMF in December 2000 and rejoining the World Bank and the EBRD. Serbia applied for membership of the WTO in December 2004, and a bilateral agreement to enable a future protocol of accession was signed between the Serbian government, the EU and the WTO in January 2011. Admission to the IFIs has involved substantial write-off of debt in return for agreement for internal economic reforms. A World Bank– European Commission-sponsored Donors’ Conference held in June 2001 raised US$1.3 bn. for economic restructuring. Two thirds of the country’s US$4.4 bn. Paris Club debt was written off in an agreement concluded in November 2001. Despite this write-off, Serbia’s total debt remained considerable at US$18 bn. compared with a GNP in 2001 of US$10.5 bn. US$10 bn. of the debt was private, money owed mostly to private banks. Further tranches of money were loaned as reform programmes were been enacted. Following further agreement with the Paris and London clubs of creditors, the share of external debt in GDP was reduced from 78.6 per cent in late 2002 to 63.8 per cent in late 2004. The external debt still amounted to approximately US$ 14.1 bn. in late 2004. The Paris Club of Creditors wrote off a further US$ 4,700 m. in debt at the end of 2005, after the satisfactory conclusion of the agreement with the IMF (Government of the Republic of Serbia, 2005: 17). The reforms encouraged by the IFIs through Serbia’s Country Assistance Strategy included privatisation of banks, the remaining state-owned industries, socially owned industries and some health-care provision; the introduction of training programmes in human resource management with the introduction of performance-related pay; health insurance reform with the introduction of provider payment; the introduction of voluntary private pensions; and a host of supply-side measures aimed at retraining workers in new skills (Government of the Republic of Serbia, 2005). The World Bank appeared particularly pleased with the Serbian government’s efforts to ‘reform’ the labour and financial markets when it awarded Serbia the top spot in its annual Doing Business indicators

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in 2006. However, external debt still remained very high having risen to over 60 per cent of GDP, and this debt burden has only since been reducible due to substantial foreign reserves built up by the government (World Bank, 2008a: 4). In order to offset this continuing fiscal problem, Serbia signed an additional standby agreement with the IMF in August 2011, for a loan of 1 billion euros. This followed the ending of the period of standby on a previous credit agreement from which Serbia drew a total of 1.5 billion euros. One of the IMF conditions for the new standby loan was that a law be designed to be introduced in parliament during 2011 allowing for the restitution of property taken in the Titoist era.11 The entry into the international financial community has therefore not been without its price. Government measures to introduce changes to labour codes, including the dilution of protective arrangements for dismissed workers, have been a central feature of change. A first key focus of dispute between the unions and the state in Serbia was the implementation of a new labour law introduced in 2001 and the associated rights to representation and to strike. The right to strike is recognised, although restricted for those in ‘essential services’ who must give at least 15 days warning of a strike. The new law also made it easier for employers to dismiss workers, satisfying a key indicator of the World Bank’s Doing Business profiles. The law was constructed within a framework of social dialogue in so far that the trade union federations were informed of the nature of the new legislation in draft form. However, both the main union federations, Nezavisnost and SSSS (Confederation of Trade Unions of Serbia), complained of ineffective consultation mechanisms and felt the need to resort to open protests and strikes against the law. What transpired was that the World Bank and IMF had been active in drafting changes to the proposed legislation before it was issued to the unions and when it was finally relayed to the unions by the labour minister, he claimed it as ‘very good law’ because it would provide ‘a friendly environment for investment’.12 Slavko Lukovic, the General Secretary of Nezavisnost, stated that the unions were not told of the World Bank’s involvement officially but learnt of the changes by ‘visiting the Bank’s website’.13 Commenting favourably on the process, the EBRD stated, ‘The new labour law that came into force in December 2001 is very free-market oriented… . The most important feature is that, in comparison with the previous labour legislation, the new law is more liberal regarding employment procedures and termination of employment, thus giving more flexibility to employers. It eliminated those features that were viewed as overly protective for workers and highly restrictive for managerial functions’ (EBRD, 2004: 15). The ILO had also made 170 observations on the law of which less than 10 per cent were accepted by the government, further fuelling the suspicions and anxieties

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of the unions. The neo-liberal intent of the 2001 Labour Law, and the ineffectiveness from the union standpoint of the process of social dialogue, appears to have confirmed the weakness of social dialogue as a vehicle for progress by the unions. In May 2004, however, the new government made a move to strengthen the formal structures of social dialogue by introducing a draft law for a revamped Social and Economic Council to include representatives from the government, employers’ organisations and the three union federations. Key union demands are the removal of a clause in the existing law stipulating the need to gain the enterprise director’s written approval before any claim for representativeness can be lodged. The penetrative demands of the triad of IFIs go deeper than changes to labour codes and embrace changes to payment systems, management style and strategy and public service provision. A World Bank report in May 2004, for example, stated that despite substantial labour market reform, economic problems are ‘… exacerbated by the fact that wage costs as a percentage of GDP and as a percentage of consolidated budget expenditures are very high. Decompression is therefore possible only within the confines of the current wage bill’ (World Bank, 2004c). The meaning of ‘decompression’ was clarified in a Letter of Intent from the Serbian government to the IMF a week later, in which it stated: To motivate health care workers and help retain them in the public sector, the wage structure for the health sector will be decompressed. In July 2004, wages for nurses and doctors will, on average, be increased by 7 percent and 14 percent respectively, in addition to the 7.5 percent general pay raise during 2004 that is envisaged under the program. With these added increases, the wage ratio between the highest grade (medical specialists) and the lowest grade (non-professional workers in the health sector) will increase from 3:1 to 3.5:1... . We will not implement a second wage increase for nurses and doctors currently envisaged for December, before consulting with the Fund staff during the September program review discussions. We will not change the method of setting the minimum wage before consulting with the Fund staff on its macroeconomic implications in the context of the September discussions on the next program review. The increase in the minimum wage on July 1 will not exceed the rate of inflation over the past 6 months.14

Such detailed action plans were combined with the privatisation programme and the internal reform of the public sector, involving a redundancy programme designed to reduce overall wage costs. The difficulties surrounding conditionality, particularly the IMF insistence on fiscal tightness, were a probable reason for the decision of the Serbian government to pay off its then existing debts to the IMF in April 2007. Analysts then predicted the likelihood of Serbia seeking loans instead from the private sector (Bozinovich, 2007). However, in 2008, the deteriorating world economic situation left

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Serbia further exposed to the vagaries of the world economy, and the government was once more forced to consider turning to the IFIs for help. In May 2009, after IMF predictions of a 2 per cent fall in GDP, the Serbian government received a loan to the value US$2.9bn from the IMF with conditions attached to reduce the budget deficit to less than 3 per cent. This was to be achieved by raising income tax and VAT and cutting public spending. The government also borrowed a further US$142m from the European Union while seeking US$1bn from Russia. Further ‘reforms’ came as a result of World Bank pressure within Serbia’s Country Partnership Strategy for 2008–11. The reforms are wide-ranging and included inter alia the sale of all remaining socially owned enterprises, the reduction of state subsidies to state-owned industries, full cost recovery of energy prices combined with liberalisation of the electricity market and the reduction of pension payments as a proportion of GDP, microfinance for SMEs and environmental protection measures (World Bank, 2008a: Annex 1). In September 2009, Finance Minister Diana Dragutinović laid some flesh on the bones of the new IMF and World Bank conditions by announcing cuts of 14,000 jobs within the public sector.15 Many of these jobs were to be lost in education, where a declining school-age population had left primary school average class sizes at 19 and secondary classes at 26. This, according to the World Bank, was unsustainable and ‘inefficient’: ‘Serbia has too many teachers … As a result, many classes are inefficiently small’ (Dillinger, 2009: 2). The outcome was a package of measures to close schools and lay off teachers, in an effort (recommended by the Bank) to create minimum class sizes of 30. Elsewhere in the public sector in the health service, the Bank has also encouraged reduction in available beds within hospitals and privatisation of services such as occupational therapy. The reduction in beds is particularly pernicious, given that the Bank’s own statistics indicate that Serbia has a lower number of available hospital beds per share of population than other comparable transformation states. The Dillinger Report for the Bank (Dillinger, 2009: 24) provides statistics from the World Health Organisation showing the number of beds per 100,000 population in Serbia in 2007 to be 540, compared, for example, to 679 in Slovakia, 712 in Hungary and 814 in Lithuania. Current ratios in the EU ‘main’ states are much lower (e.g. the UK is 360), and it is thus argued that ‘efficiencies’ can be made by increasing productivity of nursing staff and physicians and reducing the occupancy period of beds in patient aftercare programmes. As a result, the Serbian Ministry of Health implemented plans to reduce the number of hospital beds by 3,000. Changes to public sector pensions have also been announced, including a raising of the default state retirement age and reductions in the value of disability pensions. Pension payments, alongside public sector wages, were also frozen for two years in 2010.

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These cuts in the public sector flow directly from the IFI general analysis that the public sector wage bill and share of total employment are higher than that in comparator transformation economies. An IMF internal report on Serbia prepared in 2010 produced statistics comparing the government wage bill in Serbia as a proportion of GDP stating with the EU accession ten states (IMF, 2010: 11). Serbia’s share was 12.7 per cent compared to an average 10.0 per cent in the ten new member states of the EU. The assumption within the document is that Serbia’s public sector should be reduced in size. The IMF report, for example, boldly states: There has always been a consensus under the program that nominal wage freezes could only be a stop-gap measure, and that medium-term reductions in public employment will also be needed, not least in view of cross-country evidence that wage and staffing levels in Serbia’s government sector are relatively high. (IMF, 2010: 9)

However, the implicitness contained within this pensée unique of the IMF would appear to confirm that any alternative views on regenerating the economy through demand-side approaches have been closed off. The social implications of IMF policies appear secondary, and any concern for the social effect of the economic prescription is reduced to being an adjunct to the need to maintain political legitimacy. As the former ‘insider’ Joseph Stiglitz has suggested, when referring to the IFIs’ internal ‘mindset’: The problem with having the rules of the game dictated by the IMF – and thus by the financial community – is not just a question of values (although that is important) but also a question of ideology. The financial community’s view of the world predominates – even when there is little evidence in its support. Indeed, beliefs on key issues are held so strongly that theoretical and empirical support of the positions is viewed as hardly necessary. (Stiglitz, 2002)

The political reality of downgrading public services within the country has not, however, been lost on Serbia’s governing parties. Indeed, the IMF reports further that: … the envisaged reforms in the health care and education sectors, along the lines of recent World Bank recommendations, have made little headway. Although the authorities confirmed their commitment to these reforms, some officials noted that it was difficult to implement serious structural reforms in the middle of a crisis, others noted that the skilled personnel needed to implement such reforms is not available at present levels of public sector pay, while some doubted the very feasibility of sweeping structural reforms by a ten-party coalition government. (IMF, 2010: 9)

We can see from the interplay between IFI conditionality and public policy that the main focus on ‘reform’ pressure from the IFIs has been the labour

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codes, the public sector and pensions. Such reform packages are similar to the prescriptions from the IFIs in other debtor nations, and privatisation and worsening of the working conditions of ordinary workers have been a consistent outcome. Serbia and the European Union The third part of the government’s strategy for economic revival has been to seek accession to the European Union. The EU has adopted a policy position towards the Western Balkans, consolidated with the establishment of a stabilisation and adjustment process (SAP) with origins in a country summit in Zagreb in 2000. The SAP offers potential accession countries in the region an agreement to conduct political, administrative and economic reform in return for trade concessions and financial assistance. The carrot is final membership of the EU. The SAP was launched in Serbia in 2001, leading to the eventual signing of a Stabilisation and Association Agreement (SAA) in May 2008. In December 2009, Serbia applied formally for EU membership, immediately following the unfreezing of the EU/Serbia trade agreement and the dropping by of the Schengen countries arrangement within Europe for Serbian citizens to have a visa for entry. The type of reform encouraged by the process of EU accession has focused on customs and taxation policy, agriculture and visa conditions. Barriers have remained to more speedy progress. Most important are EU concerns with levels of corruption, the perceived need for judicial reform, minority and human rights and the issue of alleged war crimes, including past requests for extradition of Ratko Mladić and Goran Hadžić to the International Criminal Tribunal for the former Yugoslavia. Mladić was finally handed over by the Serbian authorities in May 2011 and was closely followed by the capture and handover of Hadžić in July 2011. Another potential stumbling block to EU accession has been the status of Kosovo. Independence for Kosovo from Serbia has been opposed by the Serbian government, which considers the region to be a UN-governed entity within Serbia’s sovereign territory. The independent Republic of Kosovo was selfdeclared in 2008 but remains partially recognised, although the USA and UK, among others, are likely to give full recognition. The EU, however, has no official policy position on Kosovo, and on 19 May 2011, during an official visit to Serbia, Jose Manuel Barroso, the President of the European Commission, said that recognition of Kosovo would not be a precondition for Serbia EU accession.16 Despite these constitutional and political difficulties, financial support to Serbia from the EU has been considerable, amounting to 1.3bn euros between 1998 and 2006, with a further commitment of 195m euros each

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year from 2007 to 2011. The European Investment Bank (EIB) has been a key player in channelling loans to Serbia for infrastructure projects that include road and rail improvement, school buildings and clinical centres. The signing of the SAA by the government exposed splits in the political elites within Serbia. Divisions focused on the question of the status of Kosovo, whereby a majority of EU countries supported Kosovan independence from Serbia. Prime Minister Vojislav Koštunica, expressing Serbian nationalist sympathies, emerged as an opponent of signing the SAA, while the Kosovan independence was, at least informally, seen to be part of the EU agenda. However, the eventual signing of the SAA was pushed through by President Boris Tadić with the support of Deputy Prime Minister Božidar Ðelić. The SAA was finally ratified in the Serbian parliament in September 2008 after the general election produced a new prime minister, Mirko Cvetković. The elections in 2008 were fought with accession to the EU as a central debating and mobilising issue, with the final victors in the election grouped around a pro-EU coalition. The net effect of the SAA will be to reaffirm political dialogue and regional co-operation between the partner states of the Western Balkans and the EU. In addition, and probably most importantly in terms of its implications for the Serbian economy, it establishes a free trade area with the EU and consolidates moves towards the free movement of workers, services and capital. SAAs have also been signed between the EU and Macedonia (2004), Croatia (2005), Albania (2006) and Montenegro (2008). Part of the ongoing process towards complete accession to the EU includes regular monitoring of Serbia’s ‘progress’ through the European Commission’s Annual Progress Reports. The major outstanding issues where further ‘progress’ is expected by the EU continue to include measures to tackle political corruption and criminality. As such, the carrot of potential EU accession will continue to shape the political debate within Serbia, acting in particular as a barrier to the fulfilment of some Serbian nationalist ambitions. In effect, while there have been divisions within the EU member states over the issue of Kosovo, the EU appears to be a credible external agent in reshaping policy and international relations within the former Yugoslavia through the use of ‘carrots … sticks … and the art of persuasion’ (Ginsberg, 2001: 50). This foreign policy initiative has been backed by substantial funding for the region as funding from the USA has declined. There is, of course, some irony here given the earlier complicities of different EU member states in supporting the secession of individual regions from the Federal Republic of Yugoslavia in the civil wars. Kosovo aside, the arguments among Serbia’s political elite for joining the EU remain the same as for other post-communist states in transformation within the periphery of the EU. Vachodova (2001: 8) argues that for such states, the EU is perceived as a ‘security-enhancing political community’

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and a ‘welfare-enhancing common market’. For conservative politicians, the EU thus offers business opportunities within a protected EU common market, and for social democrats, membership is seen as a positive step not only because it reduces uncertainty over borders and threats from neighbours but also because it creates a political atmosphere conducive to the European ‘social model’ (ESM), albeit within a market economy framework. In order to join the club, you must play by its rules, and so post-communist states are inclined to reshape their legislative, judicial, economic and social systems to fit the EU’s model. It is this process of ‘institution building’, also encouraged by the IFIs, that fulfils the EU’s accession criteria and also serves to marginalise nationalist parties. The Serbian government has now set a target for full accession to the EU in 2014 and requested full candidate status in December 2011. For some groups, however, the risks of entry to the EU are substantial. These may be small-scale farmers whose home market base is threatened by EU imports and those industries dependent on state subsidy which might be unlawful in the context of EU competition policy. A secondary side effect of EU entry would be likely to be an exodus of many skilled workers seeking better pay elsewhere in the EU, as well as young unemployed people from the ‘lost decades’ wishing to leave Serbia for a better life elsewhere. For workers and their unions, the prospects of EU accession create more dilemmas. On the one hand, the process of institution building required by the EU includes social dialogue mechanisms as part of the acquis communautaire may give legitimacy to trade unions as one of the ‘social partners’. On the other hand, the drift of EU policymaking towards a deliberative approach based on benchmarking and away from a legislative approach based on substantive legal requirement has diluted the institutional framework which allows for some advance in workers’ rights. In addition, the flexibility and employability agendas now dominant in the EU under the Lisbon process would seem to confirm a shift in the body politik of the EU towards neo-liberal prescription and away from the solidarities of the ESM (Taylor, 2009). Such pressures to liberalise the labour market, already substantial from the World Bank and IMF, would be consolidated by EU membership. Critics of the EU project in the CEE, such as Bohle and Greskovits (2004: 1 and 5), highlight this dilemma and point to the exploitation of the ‘sweating masses of workers’ in the new EU states by Westernbased business framed within a context of ‘embedded liberalism’ and free market ideology. Such exploitation is driven by a desire to extract absolute surplus value from labour-intensive industries within the region. Labour codes supportive of workers’ rights and security would be correspondingly threatened by the EU’s flexibility agenda, acting to marginalise the influence of trade unions in the process. Indeed, the very process of accession of

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the post-communist states to the EU is likely to have contributed to the ‘progressive delegitimisation of social dialogue of the expanded EU’ (Lado and Vaughan-Whitehead, 2003: 86) and the dilution of the ESM in general (Winterton, 2004). We look in more detail at the development of processes of social dialogue in Serbia in chapter 6. Notes 1 See www.imf.org/external/pubs/ft/seminar/1999/reforms/index.htm. 2 See www.eurodad.org and Eurodad 2003 PRGF Matrix and Analysis, Brussels: Eurodad, 2004. 3 The IFIs’ Role in Implementing Global Commitments to Achieve the Millennium Development Goals, Statement by Global Unions to the 2005 Annual Meetings of the IMF and World Bank (ICFTU, Washington, 24–25 September 2005). 4 Quoted in www.icftu.org/list.asp?Language¼EN&Order¼Date&Type¼CEETU RBulletin&Area¼CEEU. 5 ‘Central and Eastern European Workers Struggle to Hold Their Ground in Hard Economic Times’, an Interview with Jasna Petrovic, Multinational Monitor, May 2002, available on the web at http://multinationalmonitor.org/ mm2002/02may/may02interviewpetrovic.html. 6 Mid-term Development Strategy of Bosnia and Herzegovina (PRSP) 2004– 2007, Sarajevo: Bosnia and Herzegovina Council of Ministers of BiH, Government of Federation of Bosnia and Herzegovina, Government of Republika Srpska, Office of the BiH Coordinator for PRP, April 2004. 7 Save the Children (UK) submission to PRSP. 8 Author’s interview notes with ICFTU office in Sarajevo. 9 Mid-term Development Strategy of Bosnia and Herzegovina (PRSP) 2004– 2007, Sarajevo: Bosnia and Herzegovina Council of Ministers of BiH, Government of Federation of Bosnia and Herzegovina, Government of Republika Srpska, Office of the BiH Coordinator for PRP, April 2004. 10 ‘Employment and the Reduction of Poverty in Bosnia and Herzegovina Recommendations by the Unions of BiH’. 5 April 2005, Sarajevo: SSSBiH/ SSRS/SBDBiH. 11 Agence France Presse, www.brecorder.com/world/global-business-a-economy/ 26177-serbia-imf-agree-on-new-stand-by-loan-officials-say.html accessed 2 September 2011. 12 Quoted in interview with author by Slavko Lukovic, General Secretary of Nezavisnost, June 2004. 13 Author’s interview notes, June 2004. 14 Letter of Intent, Memorandum of Economic and Financial Policies, and Memorandum of Understanding, Government of Serbia and Montenegro, 21 May 2004. 15 www.b92.net/eng/news/in_focus.php?id=397 accessed 14 September 2009. 16 www.b92.net/info/vesti/index.php?yyyy=2011&mm=05&dd=19&nav_ category=1262&nav_id=513242 accessed 6 September 2011.

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The workers’ movement

We now trace the role of the workers’ movement in Serbia during and after the Milošević period. Before doing so, it is important to record the experience and problems faced by workers and their unions under postcommunism in the countries of central and eastern Europe (CEE). Old ‘official’ unions have been subject to varying degrees of reform, while new ‘independent’ unions have arisen to compete. Once we understand these general problems, we can locate the Serbian experience more trenchantly by examining both the political character of the union federations and the legacy of workers’ self-management on policy and practice. Debates are rife in studies of unions and workers under post-communist transformation between the importance of path dependency and path shaping in determining workers’ strategies and tactics. Path-dependent frameworks generally adopt an institution-based approach and stress the constraints on union activity (Pierson, 2004). As such, inertia of activity is dominant. In contrast, path-shaping approaches emphasise the role of agency in transformation. Sometimes this is expressed in terms of social network theory whereby institutions, as social creations, are subject to the influence of agency expressed through social interaction at both the formal and informal level (Stark and Bruszt, 1998). We adopt an approach which attempts to combine the influence of both structural/institutional factors and agency factors in our analysis. We suggest that experiences are dialectically framed by path-dependent inertia and path-shaping activity (Nielsen et al., 1995). Some ‘stickiness’ or inertia is likely as the weight of history, expressed through institutional practices and habits, is inevitably prevalent. On the other hand, trade unions are capable of acting independently from both state and employers and are likely to contest dominant patterns of thought and practice. We can examine unions’ strategic response by looking at both structural barriers and agency deficiencies. In reality, structure and agency factors interplay so that each conditions and constrains the other. In other words, institutions may both constrain and positively enable the actions and projects of interest groups and actors within civil

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society (Giddens, 1986; Callinicos, 1987). Unions thus have strategic choices for action and identity which may make a difference to their fortunes. We need, therefore, to understand the force of both structural and agency factors, which we attempt to do in our opening part of this chapter. However, we are also aware that there may be ‘ebb and flow’ in such contestation and that such ebb and flow may be expressed in terms of cycles of contention, whereby waves of protest may be facilitated or suppressed by the state. Social movement theory is appropriate in assessing this balance of forces, and this is applied in our analysis in this chapter of labour as a ‘movement’. State facilitation and repression of social movements, for example, is one of several processes that affect how social movements develop or are restrained through any ‘cycle of contention’. The upward swing of protest in a new cycle can only be ended by either reform, repression or, in extreme cases, by revolution. In the ‘mobilisation phase’, or upward swing in the cycle, the main processes that affect how a social movement develops are the diffusion of protest across groups and space, the construction of new repertoires of action and frames of meaning and the emergence of new organisations and the transformation of existing ones. As Tarrow (1998: 24) describes, ‘During such periods, the opportunities created by “early risers” provide incentives for new movement organizations. Even conventional interest groups are tempted by unconventional collective action. Alliances are formed, often across a shifting boundary between challengers and members of the polity.’ The choice between repression/exclusion and facilitation/institutionalisation is thus a balanced judgement for those in authority. Tarrow goes on to suggest that during the ‘demobilisation phase’, social movements are affected by other processes such as polarisation resulting in the development of factions, a division over radical (violent) and moderate (institutional) forms of action as well as by state strategies of facilitation and repression which, in advanced capitalist societies, are mostly deployed in a selective rather than generalised way. When applied to trade unions as movements, as Upchurch and Mathers (2011) have argued, full account must be taken of both leadership in the unions and the degree of political congruence, or shared beliefs, between union leaders and the mass of members. Such political congruence between members and leadership gives political opportunity for ‘high-risk activism’ to challenge the dominant set of beliefs in society which enables movements to thrive (McAdam, 1986). We can explain both this process of the ebb and flow and the impact of both state repression and then institutionalism when examining the progress of Solidarnoşc in Poland. The institutional framework of communist command planning, a rhetorical ‘actually existing socialism’ and collusion between the ruling Communist Party managers and trade unions provided the context for the rise of the ‘early’ Solidarnoşc

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in the 1980s. The union assumed an identity as ‘tribune of the people’ by challenging the regime before being repressed by martial law. However, once the fall of the communist regime had become a reality, the union leadership regenerated itself into something quite different; it embraced the ‘Western’ neo-liberal mantra and practice and subsumed the interests of organised labour into those of the state. We need to build in an understanding of social movement theory, and unions as movements, if we are to challenge past explanations of union progress and retardation under post-communism. The exigencies of path dependency and path shaping have, for example, traditionally focused on debates which highlight the apparent ‘labour weakness’ and quiescence in post-communist transformation. Unions as agents, it has been argued, have been constrained by legacy attributed to their role under communism. Their identity is constrained by past practice, or path dependency, with over-reliance or collaboration with employers and managers against the state or vice versa, rather than independent political and social identity. While quiescence has arguably been the norm, there are embryonic signs of new beginnings, including some greenfield recruitment and combativity often led by a new generation of activists (Meardi, 2007; Hardy, 2009; Krzywidziński, 2010), which begin to address the counterbalance of pathshaping activity. As we are attempting to suggest, an under-researched area of inquiry remains the examination of labour as a movement under post-communist transition. Indeed, the fortunes of labour have completed two waves, one of upsurge as mobilisation and independent collective identity grew during the historical moments of 1989 and then as a downward wave as unions were drawn into collaborative processes facilitated by newly reforming post-communist states. A third upswing wave of contention against marketisation may be needed to revive labour’s fortunes. However, before returning to our thesis of the importance of labour as a movement, we first examine arguments which focus on dependency approaches determined by both agency and structure. Agency factors: the legacy of communism Ost and Crowley (2001) have focused on the negative legacy of communism as a major factor in explaining labour quiescence and labour ‘weakness’ in transformation economies. Such a thesis places more emphasis on ideological or superstructural explanatory factors and emphasises the importance of agency in explaining union outcomes. As such, in Ost and Crowley’s framework, agency factors might carry with them a strong element of path dependency, which constrains their abilities to shape futures. Their argument centres on the psychology of association rather than pathology, whereby

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the trade unions under communism are associated in the public mind with the role they played in supporting state, party and management aims for the individual enterprise rather than opposition within the social relations of production. In addition, particularly within the former Yugoslav states, the ‘official’ trade unions ‘… frequently imbibed nationalist paradigms presenting other nations rather than other classes as labor’s vital opponents … this has helped delegitimise class cleavages in favour of illiberal, identitybased cleavages’ (ibid: 229–30). However, some caveats surely need to be applied here. First, any such legacy or psychology of association will only have a limited time frame. The revolutions of 1989 are now more than two decades in the past, and the Serbian revolution of 2000 took place more than a decade ago. New generations of workers facing new problems will have emerged, thus weakening the effect of legacy. Second, the legacy argument cannot totally override the social relations of production within capitalism, which have become more antagonistic as the economies have become more marketised. Third, while the old ‘official’ unions supported the one-party state, new independent unions have since arrived on the scene, while many of the unions from the communist era have sought to reform themselves. Association with the past will have weakened as new grounds for contention replace the old. However, despite these caveats we do discern a continuing nationalistic paradigm evident in Serbia which deflects from class-based interest which we describe in the second half of this chapter. Frege (2002) applies an alternative agency-based framework in her analysis of unions in post-communist Hungary and Slovenia. Following Kelly (1997), she utilises mobilisation theory as an argument for increasing union effectiveness through the establishment of collective identity. She questions the overriding importance of economic constraint as a determinant of union ill health, arguing instead that problems for unions are caused by unions’ lack of willingness to mobilise against the employer and members’ insufficient commitment to their union. In addition, she highlights an important point regarding the ideological orientation of many unions (both old and new) in post-communist states. That is their seeming dependence on seeking support from management and the state rather than adopting an adversarial ‘them and us’ attitudinal framework. Post-communist unions, she suggests, ‘have not yet understood their new role in a capitalist industrial relations system. They think they co-operate with management as in former times, but in reality they are so powerless that management does not even bother to fight them’ (Frege, 2002: 70). The final agency factor, already recorded in early studies for other transformation states by authors such as Smith and Thompson (1992), Thirkell et al. (1998) and Pollert (1999, 2000), relates to weakness caused by union

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fragmentation and division. Fragmentation came from the divide between the old ‘official’ unions and the newly independent unions under postcommunism. It is also produced from the multiplicity of union representation that emerged from within the new unions themselves. Such fragmentation means that unions are not able in many instances to present a united front to employers and government, thus enabling the latter to play off one union against the other. In addition, the tendency of the individual union federations to ally themselves with one or other of the unstable government coalition partners has had the effect of demobilising the union capacity for both industrial and political opposition to policies and practices that are deleterious to organised labour and class interests. Further complications have arisen whereby the union federations have sought to use their political allies to suppress the interest of rivals. Some structural factors Explanation for labour ‘weakness’ have also focused on the hostile environment under post-communism framed by falling production levels and rising unemployment as industrial restructuring has taken place (Rainnie et al., 2002). This argument suggests that unions are restrained by their weak bargaining power vis-à-vis the power of capital whenever post-communist states are riven by high unemployment and low levels of economic growth. The fall in production output under post-communist transformation reflects a restructuring process as the transformation economies entered the global economy (rather than remain within the abandoned COMECON market) and relatively inefficient industries and enterprises were exposed to competition. Subsidies for state-owned enterprises were also withdrawn, particularly in those states preparing the policy ground for accession to the EU. As well as rising unemployment transformation, economies have had to cope with increases in income inequality (measured by the Gini coefficient). This rising inequality has been a particular consequence of what the World Bank terms ‘wage decompression’ (Mitra and Yemtsov, 2006). This phenomenon is directly related to the growth of the private sector relative to the public and the introduction of wage and salary structures related to individual performance at the expense of seniority and skill. New production regimes consolidated in the region have emphasised low-cost production, while the wider economy has struggling consumer demand, rising inequality of earnings and income and an increase in informal working and economic insecurity. Bohle and Greskovits (2004), in observing these trends, construct a lens of post-communism as seen through a particularised regulatory model of capital accumulation. They argue that unions are structurally disadvantaged when compared to west

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European counterparts. West European trade unions, they argue, benefited from more favourable circumstances in the post-World War epoch: labour was a significant factor of production within a mass production economy and relatively high workers’ aggregate wages enabled them to act as consumers of goods and services as well as producers. A similarly restrictive heterodox model of labour exploitation was also advanced by the late Peter Gowan (1995). He argued that West European capital sought eastward expansion to exploit cheaper labour and expand markets. Extensive labour exploitation, achieved through poor working conditions and relatively low pay, was necessary for capital accumulation and profit maximisation of Western-based capital expanding to the East. Such processes are purportedly driven by elites, linked to the interests of Western-based transnational capital (van der Pijl, 1993; Shields, 2008). David Harvey (2003: 145–7) frames this Western domination as ‘accumulation by dispossession’ similar to the ‘primitive’ stage of accumulation as defined by Marx. Harvey’s model postulates the reduction of populations to ‘debt peonage’ as the power of CEO’s is increased and the finance sector dispossesses assets by credit and stock manipulation. This ‘dispossession’ assumes that the dispossessors are agents of Western capital conducting a raid on the assets of the postcommunist states mediated through the agency of financiers.1 The emphasis on dependency is evident in other, orthodox models associated with the varieties of capitalism (VoC) approach to cluster modelling. Poland as well as the Visegrad countries are presented as ‘dependent market economies’ (e.g. Nölke and Vliegenthart, 2009: 672). In expanding this framework, Feldman (2006) isolates Estonia as an example of the LME approach and Slovenia as CME and proposes that such development ‘mirrors the variation in advanced OECD countries and suggests that it may not be necessary to invent new models of capitalism to analyse all the new economic institutions in transition countries’ (ibid: 850). An exception to the trend of ‘dependency’ or ‘embedded neo-liberalism’ appears to be Slovenia, for which both Buchen (2007) and Bohle and Greskovits (2007) attach the familiar label of ‘co-ordinated market economy’, reflecting the closest association of EU-style social partnership and social dialogue. The dependency/exploitation thesis appears confirmed by key data. Onaran (2008) finds that wage growth has generally not kept pace with productivity growth (GDP/employee) in the CEE, especially in manufacturing. Unit labour costs have fallen in relative terms. To this low labour cost regime must be added data on informal working, which acts to re-enforce low labour cost regimes through depression of wage rates and negation of opportunities for labour to organise. The parallel rise in the ‘shadow economy’ or informal labour market makes it especially difficult for trade unions to sustain union recruitment. Much

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informal work is illegal and criminalised, with overtones of sexual harassment and prostitution, corruption and people trafficking. Individual workers become separated from the collective interest of their former workmates and are forced to adopt a highly individualistic approach to personal survival. In such circumstances, trade union appeals to collective worker interest become a distraction from everyday survival. In addition, the very existence of a black economy provides a ready pool of reserve labour willing and able to undercut the price of labour in legal, formalised workplaces and industries, thus creating a threat to trade union organisation. In the macroeconomy, the black economy acts to reduce government revenue from tax, thus making it harder for the state to create physical and social infrastructure, or to take measures favouring the redistribution of wealth. Data indicates that the informal economy in transformation economies is not only larger than in the West but has increased in relative size since transformation. The average size of the shadow economy in the nine countries of the CEE, for example, increased from 23.4 per cent of the labour force in 1990–93 to 29.2 per cent in 2000–01. Figures for the Balkan countries reflect these overall figures, with a recorded shadow economy in 2000–01 of 35.1 per cent of total labour force in Macedonia, 30.4 per cent in Bulgaria and 27.4 per cent in Croatia (Belev ed., 2003: 26). A final feature of industrial relations transition has been the apparent failure of social dialogue. Social dialogue is irretrievably tied to the acquis communautaire necessary for accession to the European Union. In an informal sense, and outside the ambit of the procedures of the EU, social dialogue may simply mean basic rights afforded to organised labour, including freedom of association, recognition of trade unions by the employer and the right to collective bargain. However, despite the accession of an advanced guard of states to the EU in 2004 and 2007, ‘actually existing social dialogue’ is notable by its absence. Social dialogue has been termed as an ‘illusory corporatism’ (Ost, 2000) or as a ‘fragile shell’ (Pollert, 2001), meaning that the formal procedures and partnerships may be evident at national level and the relevant codes of practice are signed, but in practice trade unions and employers are distanced from each other. More recently, Meardi (2011) has described social dialogue under transformation as a ‘talk show’. Meardi pessimistically suggests that this process has pulled the EU in the direction of the NAFTA model, whereby the single market is solely designed to benefit business and free trade and where workers’ rights are deliberately pushed to the policy margins, or even pushed over the cliff towards a deregulated abyss. Indeed, the process of acquiescence to the discourse and practice of social dialogue and social partnership may have reinforced labour weakness by acting to depoliticise agendas and constrain

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unions from adopting roles as agents of class-based interest. It is to this theme that we now turn our attention. Labour as a movement? We argue that it is the process of depoliticisation of the unions and demobilising of members which offers a cogent explanation of continuing weakness. Trade unions in post-communist states have undergone a sea change in their strategic orientation. The context in which trade unions operated under communism was the signal for such changes, beginning with the rise of Solidarnosç in the early 1980s. However, Solidarnosç was not the first movement to challenge the state bureaucracy. It was preceded by Berlin in 1953, Hungary in 1956 and Czechoslovakia in 1968 (Harman, 1974). Its significance was that its challenge came in a period of state weakness rather than strength, when growth rates in the Communist Bloc were beginning to fall behind those of the West and the forces of perestroika and glasnost were gathering. A political opportunity had presented itself, and Solidarnosç rapidly became the tribune of the oppressed and a focus of democratic opposition. As Barker (2001: 180) records, ‘… growing numbers of workers began to discover and develop a new environment among themselves… . It involved collective empowerment, the development of new social and personal identities, and a self-recognition of themselves as history-makers’. The classic features of a social movement ‘theory’ were manifest. New movements and new ways of protesting, constructed by ‘early risers’ such as Solidarnosç, were afforded by the political opportunities presented. As Gamson et al. (1982: 15) outlined in general terms, the ingredients of a successful social movement were apparent whereby Solidarnosç acted to challenge the dominant set of beliefs representing the status quo ‘with an alternative mobilising belief system that supports collective action for change’. Mobilisation around new beliefs helped to forge a collective identity, precisely because actions were taken within a framework of social interdependence and the expectation that action would also be followed by others (della Porta and Diani, 1999: 107). The revolutions of 1989 varied in worker content but shared the same experience of political rupture from which new relationships between state, capital and labour were forged. Most notably, the process of rupture was associated with the formation of new ‘independent’ unions. In Russia, the workers’ movement came to the fore in the period between 1987 and 1989, particularly among the miners whereby workers’ committees were established in many enterprises and towns and cities (Clarke, 2007). In other cases, such as in Hungary through the 1980s, pressure for change from the unions paralleled shifts among party elites, allowing small but limited

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movement for independent action (Noti, 1987). Most important were the strategic relationships forged between the challengers to authority and the authorities themselves (e.g. the state). The challengers must judge the opportunity–threat, and the authorities determine the subsequent degree of facilitation–repression (Tilly, 1978). Within this dynamic rupture, a combination of events and outcomes is possible, leading one commentator to apply ‘game theory’ in the case of the Chinese state response to the Tiananmen Square uprising in 1989 (Deng, 2010). We can discern two distinct trends which acted to place a break on the cycle of contention. In many instances, unions were drawn into social partnership modes of operation by states wishing to nullify opposition and legitimise their policies. The old Solidarnosç activists put themselves to work as agents of ‘shock therapy’, while the Russian unions became demobilised by the praxis of social partnership (Ashwin and Clarke, 2002; Ashwin, 2004). Exogenous influences drew them to social democratic ideology with help and advice from agencies such as the International Confederation of Free Trade Unions (now ICTU), the US union federation AFL-CIO and the German-based Friedrich Ebert Stiftung. However, social democratic ideology contemporaneously clashed directly with the realpolitik of neoliberalism, morphing into forms of social liberalism in the process. In response, many unions sought alliances with new and emerging political parties in the hope that once in power, such parties may be more labour friendly than their predecessors. Such a ‘state capture’ strategy failed to address the central problem enshrined in dependence on neo-liberal solutions to the countries’ economic plight. The effect was often to create forms of subdued or even authoritarian corporatism (see Valenzuela, 1992, for a typology) in which the state incorporated labour leaderships. This was evident in the cases of (the later) Solidarnoşc in Poland (Ost, 2001) and KOZ in Slovakia (Stein, 2001). In other states, however, repression was the favoured state strategy. This was most evident in Belarus (Titarenko et al., 2001), but in others, the practice of repression sat side by side with the rhetoric of facilitation. Often such double standards were applied through bypassing or ignoring the ‘rule of law’. Collective agreements might be signed but were then ignored by employers (see Hoffer, 1997, e.g., of such malpractice in Russia). Social dialogue frameworks might be constructed, but protective labour codes were rescinded, often under conditionality agreements struck with international financial institutions. We thus notice a general retreat into defensive and accommodationist method by labour as a movement under post-communist transition. However, a key question to pose is whether or not this downward wave has its temporal and material limitations. Do the stirrings of dissent identified by Meardi (2007, 2011), Hardy (2009) and Krzywidziński (2010) represent the beginnings

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of a new wave of discontent, spurred by the failed expectations under neoliberalism, or are such stirrings mere aberrations? It is through this particular lens of labour as a movement that we now proceed to examine Serbia. The Milošević years: new and changing frames of contention The role of labour within Serbia’s recent history can be described as one in which class-based worker opposition to the Milošević regime was deflected at key junctures by national chauvinism, only to return with a vengeance against the regime in October 2000. Indeed, one unique problem of labour movements throughout the region was their complicity in nationalism during the period of the civil wars. As Đurić (2002: 35–6) records, ‘Labour in Serbia, and likewise in Croatia, Bosnia and Herzegovina, Montenegro, Kosovo and Macedonia, was not only embroiled in nationalist conflicts but jealously participated in them.’ There was a hangover of nationalist- and ethnic-based union structures after the wars. In Kosovo, for example, there remains a Serbian union and an Albanian-speaking union, and in BiH, there exists the Confederation of Trade Unions of Bosnia and Herzegovina in Sarajevo, which organises Muslims and Croats in the Muslim–Croat Federation, and the Confederation of Trade Unions of Republika Srpska, which organises Serbs in the Republika Srpska entity. Arandarenko (2001), in referring to differences between Serbia (infected by nationalism) and Slovenia, argues that this triumph of nationalism was a product of Serbian labours’ weakness, a particular legacy of collaborative self-management in the Serbian region of the former Yugoslavia. In contrast, Stanojević (2003) offers an alternative explanation and a contrary position that the Serbian Socialist Party (SPS) faction led by Milošević had played a nationalist card precisely because of labours’ strength. In truth, Milošević was clearly threatened by the workers’ movement and sought to deflect it. On the other hand, collaborationist tendencies identified by Arandarenko may have created a situation whereby trade union leaders and their members were always likely to have fallen short of calling for fundamental societal change, preferring instead to demand regime change within a liberal democratic process. It is also true, as Grdešić (2008) observes, that the shortness of the (10-day) period in which Slovenia was engaged in war meant that nationalist agendas had less time to gain ground in the unions, who were then better placed to make their independent claims of interests and rights within society. The workers’ movement in Serbia changed and continued to evolve in the period immediately before and after the October 2000 Revolution. The transition process was very dynamic and full of complexities, contradictions and conflict (Stajić, 2004). The newly emerging unions and workers’ organisations positioned themselves somewhat differently in relation to

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the Milošević regime and in the process were often opposed to each other politically and organisationally. Key points of difference between the main union federations focused not only on the practical items of transition such as privatisation and public sector reform but also on relationships with governing or aspiring political parties, and the attitude towards war and nationalism. Before examining the interplay between the unions, we first look at the evolution of the unions during and immediately following the October 2000 Revolution. In doing so, we express our analysis within the frameworks of upward and downward waves within the first cycle of contention, that of pro-democracy and anti-regime in the years leading up to the revolution, and the second cycle of contention against neo-liberalism and privatisation. The first upward wave and the ‘early risers’ During the late 1980s, popular opposition to the Yugoslav regime within Serbia was fed by a combination of economic deprivation and the desire for political democracy. This general political feeling was reflected in a ‘golden age’ of strikes where they came to be accepted within society as a legitimate expression of grievance (Arandarenko, 2001). Data from the Council of Trade Unions in Yugoslavia recorded over 2,000 strikes in the country in 1989, with over one million participants (Marinković, 1996). However, despite this general acceptance of the workers’ movement as a legitimate political actor in ‘late’ Yugoslavia, there were emerging tensions which reflected the nationalist aspirations in the wider political arena. Trade union leaders who did not abide by nationalist creed in the 1990s were in danger of losing their positions, as evidenced by the dismissal of the president of the Union of Autonomous Trade Unions of Croatia, who was purged in 1993 for daring to talk to his counterpart in the Serbian-based independent union Nezavisnost (Đurić, 2002). As worker dissatisfaction gathered pace towards the end of the 1980s throughout Yugoslavia, the authority of the Milošević regime in Serbia became directly threatened. Eventually Milošević was forced to act. A crucial moment of confrontation took place in June 1990 when over 30,000 workers from Rakovica travelled on foot for a protest rally in front of the Assembly of Yugoslavia. They came to express their discontent at the government and to demonstrate against economic policies that had led to their own deteriorating social and material condition. Slobodan Milošević agreed to address the demonstrators but made a belligerent and highly calculated Serb nationalist speech which he ended by urging everyone ‘to go back to work’. In effect, as one leading trade union activist observed, ‘we came to the rally as workers and left as Serbs’ (Antonić, 1994).

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In the early period of the wars, the number of strikes reduced significantly from their 1980s height under the countervailing influence not only of nationalism but also rapid inflation and increasing unemployment (Marinković, 1995). During the wars, it is notable, however, that major industrial disputes continued to take place within Serbia. Disputes began to increase in scale and intensity, with the first general strike of half a million textile and metal workers in 1991, which led to divisions between the conservative and reform wings of the ‘official’ trade union federation allied with the ruling party, the Confederation of Trade Unions of Serbia (SSS) (Andrejić, 1999). The formal position of the SSS in the majority of these strikes was to side with management rather than give support to the striking workers. Scherrer (2001) reports that in the Sartid steelworks, for example, whose boss was a leading figure in Milošević’s SPS party, the company newsletter before the October 2000 Revolution stated that unions from the opposition were ‘traitors of the fatherland and spies from Western powers’. Such tensions eventually led to a crisis of representation legitimacy within the SSS and led the reform wing to split and form the core of the new independent union Nezavisnost founded at a meeting in Belgrade University in 1991 called by the Independent Media Union and a number of newly emerging unions, many of whom were based in the engineering industry. Contemporaneously, sections of SSS broke off whole to form occupational or industry-based unions, such as the Belgrade Television and Radio union and the Smelters’ Union at the copper rolling mill in Sevojno and at the FOM Foundry in Novi Belgrade. Further industrial disputes took place among unions representing teachers who went on strike in 1996, 1997 and 1998; electricity supply workers in 1993; the Belgrade transport workers in 1993 and 1998; and medical workers in Nis in 1998 (Marinković, 2001). Major strikes and street demonstrations took place in the winter of 1996–97 in Belgrade which, according to Nikolić (2002: 82–3), were significant for their focus on demands for political democracy in contrast to the more national chauvinist demands to be heard in the demonstrations of 1991 and 1993. By the end of the decade, the mood had changed to one of solid opposition to Milošević and his policies within the wider region. This change was undoubtedly fed by the deteriorating economic situation caused by the wars, NATO bombings and sanctions against Serbia. From 1990 to 2000, real gross social income in Serbia fell from US$28.4 m to US$8.7 m, while the income by inhabitant (GDP per capita) fell from US$2696 to US$1494. At the same time, the ‘grey economy’ as a proportion of GDP increased to as much as 53.4 per cent in 1994.2 The major reason for this rapid decline would appear to be the decrease in industrial production, which fed through to declining real and actual incomes (see

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Table 5.1 Rate growth of GDP and industry production in Serbia (1989–2000) Year

GDP (%)

Industrial production (%)

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

1.3 –7.9 11.6 –28.0 –30.8 2.5 6.1 5.9 7.4 2.5 –23.2 6.4

1.0 –12.0 –18.0 –23.0 –37.0 2.0 4.0 6.0 10.0 3.9 –25.6 11.4

Source: Savezni zavod za statistiku: Statistički godišnjak Jugoslavije 2002, Beograd 2003

Table 5.1). The economic situation became severe as the political conflicts continued, internal borders were closed to trade and international contracts evaporated. Most dramatically, strategically important enterprises across the former united Yugoslavia such as Zastava in Kragujevac, Energoinvest in Sarajevo, the Aluminium Plant in Podgorica and Agrokomerc Velika in Kladuša faced collapse through production loss. For the workers, the future became one of falling incomes, redundancies and destruction of pensions. Among the urban population, however, the poverty index increased sharply during the observed period, from 13.2% in 1990 to 30.4% in 1996. Posarac (1997) identifies in particular the rise of urban poverty in this period with the families of blue-collar workers in the industrial sector and miners worse hit. In 1996, for example, half of these social groups had income below the minimum food consumption basket. Challenge to the regime: new frameworks of contention Challenges to the official union structure had begun around 1989 when new independent unions based on craft or professional occupation emerged. In 1991, two independent federations (including the federation of UGS Nezavisnost and a smaller breakaway federation the Association of Free and Independent Trade Unions – ASNS) were formed in opposition to the Milošević Socialist Party regime. The official union federation from the Milošević period, the Federation of Trade Unions of Serbia (SSS – Savez Sindikata Srbije), dominated the scene in the Milošević period, was loyal to

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the ruling Socialist Party and had inherited the property (offices, real estate, etc.) from that time. The federation can trace its roots back to 1903 when it was established as a single centre for unions in Serbia. It later became part of the general union confederation of all Yugoslavia in the interwar period, and was loyal to the Tito regime and the self-management experiments in the period after World War II. Its leadership has also been in power for a long time, is both ageing and conservative and has clearly had a vested interest in preserving the union’s income and wealth (if only to guarantee the leaderships’ pensions). When the wave of strikes and labour dissatisfaction grew in the late 1980s and early 1990s, the SSS trade union leadership failed to support the strikes and clearly abandoned workers’ feelings of discontent by siding with the state nomenklatura. The vacuum created subsequently gave political opportunity to the rise of oppositionist and independent unionism. The rise of independent unionism in the late Milošević period raised the issue of how the state in Serbia would react to demands from below for societal pluralism that would contain more than one (disloyal) trade union stream (see Belgrade Centre for Human Rights, 1999). In reality, the political elites had no enthusiasm for the prospect of trade union pluralism, in a situation where trade unions had traditionally been an adjunct of state power on the communist model and where economic instability and downturn was all too apparent for the immediate future (Andrejić, 1999). The state initially resisted legal changes that would have enabled independent unions to be recognised at the workplace, and conflicts between the old ‘official’ and new ‘independent’ unions were exacerbated. The mechanisms of collective bargaining were established at enterprise, sector and national level (the general collective agreement) in 1991, but the SSS was favoured in this process as the ‘majority trade union’ (Marinković, 2000: 38). In return, the SSS attempted to create the illusion that they were on the workers’ side but in practice acted to sabotage strikes, for example, by announcing strikes and then cancelling them the next day, or by sowing confusion in workers’ minds about the potential outcomes of disputes (Marinković, 2000: 45). In individual workplaces, activists of the independent unions acted particularly bravely, facing both discrimination and persecution because of their activities. In 1991, for example, approximately 1,000 employees of Belgrade Radio and Television were laid off; the excuse given by the government was the need for financial cutbacks as a result of the deteriorating economic situation. However, as Marinković (2000: 40) reports, ‘Naturally the best journalists and technical experts, those who refused to be obedient, were among the first to be laid off ’. Some of the affected journalists responded to the repression by forming a new independent union and breaking away from the SSS. In January 1994, activists of the independent EPS (energy and utility) union, who had

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organised the first strike in the electricity industry in Serbia the month before, were repeatedly arrested by the state authorities.3 The political character of the union federations: roots of collaboration The rise of the independent unions was first expressed through the establishment of rank-and-file groups to protest against the paralysis and accommodationism of the SSS leaders and to call for their replacement. As a second step, individuals mobilised to break from the SSS and form the new, independent unions at either enterprise or national level. The new unions were formed in parallel to a proliferation of new parties, which, as Arandarenko and Stojilković (2006) suggest, may have restricted the development of workers’ self-organisation simply because it was tempting for activists to throw their energies into the new parties as a ‘shortcut’ to political advance. The new unions were mostly created by the elite groups of workers, such as white-collar workers, pilots, lorry drivers and journalists. They often stressed their non-political character, contrasting this to the close relationship between the old union and the party state (Arandarenko and Stojilković, 2006). Because of state-controlled access to the media, informal and unofficial communication via the Internet proved to be a valuable organising tool for the new unions (Živković and Hogan, 2006). 1. SSSS: The official union and reform Faced with the new situation after the October 2000 Revolution, the SSS clearly needed to adapt and reform if it was not to be threatened by the rise of independent unions. The union changed its name and successfully applied for membership of the World Confederation of Labour (WCL), which in turn has since merged with the International Confederation of Free Trade Unions to form the ITUC (International Trade Union Confederation). The federation’s political identity is evidenced by its lingering post-communist and pro-Serb nationalist positions. Fraternal links were re-enforced in 2008 by visits and delegations to the All-China Federation of Trade Unions, through which it co-operates with others of the old ‘official’ unions in the Balkan region. In 2008, the federation also issued an appeal to other union centres outside of Serbia against any form of independent status for Kosovo.4 The federation is organised on a geographical and sectoral level with more than 30 branch unions. In policy terms, (the now) SSSS initially opposed privatisation but has since changed its position to support, with the usual union caveat that the state should introduce welfare programmes to offset redundancies. There is little sign,

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however, of major internal reform and while the SSSS has taken joint action with Nezavisnost over amendments to the labour law and in some major disputes such as that at US Steel in 2003, it has also called independent demonstrations sometimes with nationalist overtones. In October 2003, for example, the SSSS organised a protest march through Belgrade demanding early parliamentary elections and an end to the governmentorganised privatisation of state-run enterprises. The demonstration was attended by more than 4,000, but the closing rally was addressed by representatives of Serbian extreme nationalist parties including that founded by the notorious (and since assassinated) Serbian warlord Arkan (Stojanović, 2003). There is a danger, therefore, that the SSSS strategy will continue to vacillate between class and nationalist identity. We can describe such a strategy as conditional opportunist, whereby opposition to neo-liberalism and employer excess is conditional on parallel support being given to authoritarian, albeit reformed communist politics, and opportunist whereby the ‘threat’ of class conflict may be opportunistically diverted or contained by nationalism. As such, there are limitations on the political appeal of the SSSS, which means that continued internal reform is needed as its particular union identity may not be sustainable in the longer term. Further co-operation with the independent unions, including Nezavisnost, may act in the future to temper its conditional opportunist character. 2. Nezavisnost: Independence The period of civil war formed the backdrop to the formation of UGS Nezavisnost (Independence) in 1991 from within the ‘reform’ faction of the SSS. Nezavisnost adopted a deliberate strategy of autonomy from the state and nominal independence from political parties. Its social identity was defined by opposition to both war and nationalism, and after the war, it maintained membership of minorities within Serbia such as the Hungarians in Vojvodina, as well as Croats and Albanians. From its foundation, individual members of Nezavisnost undoubtedly fought a brave fight against a hostile regime and were actively involved in organising the rise in disputes towards the end of 1993 and the wave of anti-regime demonstrations in the winter of 1996–97 (Uvalić, 2005). Membership grew after 1995 until the October 2000 Revolution when membership temporarily peaked as Nezavisnost played a key role in organising against the old regime and its corrupt handling of the election results. During this early period, the federation claimed 180,000 members in more than 1,000 workplaces. Membership is organised in approximately 13 sectoral branches, in contrast to the geographical structure of SSSS. The union supported the strike of Kolubara miners against the opposition of the SSSS (Marinković, 2003). It sought allies with other opposition groups during this period including

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the G17 Group (a political opposition group with neo-liberal intentions), various NGOs and the student-based movement Otpor! (‘resistance’ in English).5 While opposing full merger or creation of political parties, it has nevertheless sought to seek alliances with parties by signing agreements on limited policy issues. The most significant of these agreements was the ‘Contract for a Democratic and Socially Just Serbia’, signed in May 2000 between Nezavisnost and nineteen opposition parties. In effect, despite remaining independent of political parties, the union has developed an embryonic alternative political programme. Political debate within the union had been spurred by the publication of various documents discussed at a series of education schools for union activists. Assistance in financing the schools has been given by the European Trade Union Confederation (ETUC) and International Trade Union Confederation (ITUC),6 to which the union is affiliated, as well as the American AFL-CIO Solidarity Center, the Friedrich Ebert Stiftung, the German union Ver.di and the UK union UNISON. Some funding has also come directly from USAID.7 The process of politicisation culminated in the publication of a Platform for a Way out of the Crisis (Nezavisnost, 1999a), and then a conference in January 2002 sponsored jointly with the ICFTU/ITUC and the ETUC after which a statement was issued containing inter alia the following points of significance8: a. b. c. d. e. f. g. h.

The goal of EU membership The strengthening of social safety nets Re-establishment of links with Serbia’s neighbours Formal mechanisms to establish ‘genuine’ social dialogue Full consultation and negotiations with IFIs Increased resourcing for vocational training (especially for women) The establishment of independent labour courts The establishment of a tripartite public enterprise council to examine in detail the social and economic effects of each case of privatisation i. Consideration of alternatives to privatisation, including reform and commercialisation of public companies j. A progressive tax system to fund a social safety net

As such, Nezavisnost appears to have adopted a social democratic orientation flavoured with caution towards the worst aspects of privatisation. The metalworkers’ branch of the union, for example, with a claimed 35,000 members in 240 companies in 2009, declares the following goals, which highlight its social democratic orientation: The task of the MWBU ‘Independence’ is to protect and safeguard the economic, social, educational, professional, cultural, political and other interests of its members and of all workers employed in the metal industry comprised by this Union. For this reason, the MWBU ‘Independence’

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supports the development of legal, democratic and social state, establishment and development of market economy, privatization on the principles of economic efficiency and social justice, for participation of employees in codecision-making in the companies, for legal and physical protection of human and union’s freedoms and rights, association and integration of Serbia into the International Community and International Division of Labour, for peace, cooperation based on equality and understanding with neighbouring countries and all the people throughout the world. (www.gsmnezavisnost. org.yu/eng/index_ciljevi_zadaci.php)

In its early days, Nezavisnost’s oppositionist and campaigning orientation created an appeal ‘beyond the workplace’, producing a flavour of social movement unionism. In more recent times, such political activism has become increasingly more restrained with less rank-and-file involvement, while the union leadership has oriented on a social dialogue approach and the need for Serbia to court membership of the EU. Most importantly, the federation has become somewhat compromised by its support for the government elected in 2004 with its close identification with the new labour minister, Slobodan Lalovic of the Social Democratic Party. This party was the smallest of the coalition parties in the government led by Vojislav Koštunica. However, in 2005, the party split, Lalovic became an independent parliamentary representative, and Nezavisnost’s position was left exposed. 3. The ASNS The third federation, the Association of Free and Independent Trade Unions (ASNS – Asocijacija slobodnih i nezavisnih sindikata), is the smallest of the three federations and was formed by breaking away from Nezavisnost in order to form a political wing allied to the Democratic Party. This was the party of the assassinated Prime Minister Zoran Đinđić, and critics in that period described the ASNS as ‘Đinđić’s in-house union’ (Đurić, 2002). Its leader, Dragan Milovanović, became minister of labour in the Đinđić-led government. In a notorious incident, Milovanović, while minister of labour, dismissed twelve Nezavisnost trade union activists from his tractor-making company in New Belgrade.9 While the ASNS has led a number of important disputes, it has also adopted a strategy of formalised and permanent political activity linked to a political party. The strategy of ASNS emphasises the potential dangers of co-option and incorporation of the union movement if it accommodates to the political and economic imperatives of neo-liberal market reform. The perils of this dual approach became apparent once the favoured political party was in power and it utilised its trade union base to demobilise workers and suppress rival union groups. Demobilisation of workers in this case was deemed necessary to remove obstacles to neo-liberal reform policies. As such, this strategy is even

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reminiscent of authoritarian corporatism, reflecting the state-sponsored and incorporated unionism typified by the Peronist example of Argentina (Valenzuela, 1992; Crouch, 1993). Similar examples of such an approach in the CEE have been noted in the cases of (the later) Solidarnoşc in Poland (Ost, 2001) and KOZ in Slovakia (Stein, 2001). In October 2004, the ASNS, however, dropped its support for the Democratic Party and established its own party modelled on Britain’s New Labour, called the Labour Party of Serbia. The ex-president of the union and ex-labour minister, Dragan Milovanović, was appointed as president of the new party.10 However, when put to the test in the elections of November 2003, the new party failed to cross the 5 per cent threshold, and the 10,000 votes received for the party were much less than its (claimed) membership. Further trouble occurred for the ASNS after the 2004 election when the ruling coalition changed and any lingering state favouritism towards the ASNS evaporated. 4. The occupation and enterprise-based unions Outside of the main federations are a number of enterprise-based unions, most notably in the electricity supply industry. The independent union EPS, for example, was the majority union at Kolubara and was central to the strike which was so crucial in overthrowing the Milošević regime in October 2000. It separated from SSSS a year after the foundation of Nezavisnost in 1991 and has since become a member of the ICEM (International Federation of Chemical, Energy, Mine and General Workers’ Unions). Prior to its key role in October 2000, the union had led the important strike in the Serbian electricity supply company in 1993–94, which was broken by retaliatory state pressure. Some of the other enterprise-based independent unions began life as collaborative ‘in-house unions’ in the Milošević period, and others are newly independent unions. One other very significant enterprisebased union is the Oružari union of the Kragujevac arms factory Zastava Namenska. The union was to the forefront of the opposition movement leading up to the October 2000 Revolution and staged a series of hunger strikes against the regime in the late 1990s. In the revolution itself, they organised road blockades and dressed as a ‘brand’ with black tee shirts presented a militant front to the union movement (Grdešić and Meszmann, 2009). Union membership Union membership data in Serbia is unreliable as membership reports from the federations may be exaggerated (see Uvalić, 2005). An independent report estimated trade union density to be around 50 per cent in 1999 in Serbia (ISSA 1999), but this is likely to have fallen since. Nezavisnost commissioned a yearly ‘Trade Union Barometer’ which recorded density rates

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across the country of about 35 per cent in the early 2000s (Nezavisnost, 2002, 2003, 2004). Density remains high in the state sector at almost 70 per cent, but in the private sector, density is no higher than 6 per cent. In terms of division of membership, an internal union estimate placed SSSS in 2004 with between 280,000 and 380,000 members (although in 2009 its website ‘claimed’ a membership as high as 850,000), Nezavisnost with 290,000, ASNS with 40,000 and as many as 100,000 in various enterprise unions.11 Based on the test of ‘representativeness’ data, the Ministry of Labour in late 2004 produced lower membership figures, with SSSS recording 450,000 members and Nezavisnost 185,000 valid members. ASNS recorded no valid members as it had failed to cross the necessary 15 per cent national test of representativeness. Some workers might be members of more than one union (Arandarenko, 2001: 172). In some of the major workplaces, such as US Steel, it is not uncommon to find membership presence from all three federations together with a degree of co-operation between the unions in their everyday dealings with the employer (author’s interview notes). However, such co-operation at the rank-and-file level is not necessarily replicated in the union leaderships. Particular rancour exists between the two independent federations and the SSSS over union property rights (offices, equipment, real estate, etc.), with all property from the pre-revolution period still being retained by the SSSS. The law on representativeness contained in the new labour law, requiring a 15 per cent trigger for union recognition, may help to encourage union co-operation at local level in order to achieve the necessary critical mass in individual enterprises. Similarly, the merger of the ICFTU and WCL to form the International Trade Union Confederation in 2006 may smooth the way for further co-operation between the SSSS and Nezavisnost. In 2011, for example, the two unions worked together to oppose measures contained in new legislation to restrict pension and disability rights. Whither self-management? In chapter 2, we explored the origins and nature of the Yugoslav experiment in self-management and workers’ councils. It could be hypothesised in a path-dependent framework that self-management would have left a footprint shaping industrial relations expectations in the transformation period (Tayeb, 1991; Mramor and Valentincić, 2001). However, as we have indicated in chapter 2, self-management, even during the Tito period, was criticised by leading dissidents for consolidating separate class interests within the enterprise (e.g. Đilas, 1957). Others pointed to the divide between rhetoric and reality of self-management whereby the employee had very little influence in decision-making (Molnar, 1996; Madžar, 2000).

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The legacy of self-management is thus complicated and is clouded by negative associations with a failed economy. Such conclusions appear affirmed in published sample surveys undertaken by the authors. Table 5.2a and b provides some additional data from a preliminary survey of trade union activists from the three union federations and another of managers in Serbia during 2003–04. While the sample is small, it provides some insight into the complications surrounding perceptions of self-management. As can be seen from the tables, both trade union activists and management would appear to have generally negative perceptions of self-management, with only 5 per cent of union activists and 11 per cent of managers agreeing that self-management would be ‘useful for enterprises in Serbia today’. A greater proportion of the trade union activists (65 per cent) than managers (44 per cent) also disagreed with the statement that self-management was ‘democratic’. The main reasons for the negative perception of self-management are highlighted in qualitative responses from the same survey, listed below, which confirm that self-management is associated with the economic failures of the past and is viewed cynically by some workers. Self-management had an impact during a particular period of history, but was condemned to failure in the long term because it conflicted with the goals of private ownership. (Male aged 45–55, a legal consultant in the oil industry and a member of Nezavisnost) Self-management had positive values in the development of Yugoslav society, but in the end it failed to produce efficiency and stagnation set in. (Male aged 45–55, an engineer at Zastava auto factory and a member of Nezavisnost) During the last fifteen years of transformation, the maladies of self-management have appeared, such as non-defined property rights, unemployment and technological backwardness. (Male aged 36–45, a computer specialist in a car components factory, Kragujevac) Self-management was a burlesque of the time, an excuse skilfully used by management to fulfil its agenda. (Male aged 46–55, a sales officer in the petroleum industry and a member of Nezavisnost) I think the period of self-management gave some formal rights to workers, and that the directors had most power. The current period reflects that. (Male aged 56 or more, a deputy director of a hotel)

In his report of the views of union activists from Serbia and Montenegro at a trade union school hosted by the ETUC in 2001, Watt (2001) draws similar conclusions. He remarks that ‘for someone new to the Balkans, the prevailing cynicism about worker co-management was rather sobering …’. The general ambivalence is further confirmed by comments from within the

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1 (4.8%) 2 (9.6%)

Self-management increased workers’ wages too much

Self-management led to unemployment 5 (25.0%)

4 (21.1%)

Self-management increased productivity in the workplace

Self-management is useful for enterprises today in Serbia

5 (25.0%)

Strongly disagree

Workers’ self-management in Yugoslavia was democratic

Statement

8 (40.0%)

8 (38.0%)

5 (23.8%)

7 (36.8%)

8 (40.0%)

Disagree

6 (30.0%)

4 (19.2%)

5 (23.8%)

5 (26.3%)

2(10.0%)

Don’t know

1 (5.0%)

4 (19.2%)

6 (28.6%)

3 (15.8%)

5 (25.0%)

Agree

Table 5.2a Trade union activists’ perceptions of self-management in Serbia (n = 23)

–

1 (4.8%)

4 (19.0%)

–

–

Strongly agree

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6 (33.3%) 8 (44.4%)

Self-management increased workers’ wages too much

Self-management led to unemployment 12 (66.7%)

8 (44.4%)

Self-management increased productivity in the workplace

Self-management is useful for enterprises today in Serbia

4 (22.2%)

Strongly disagree

Workers’ self-management in Yugoslavia was democratic

Statement

2 (11.1%)

–

2 (11.1%)

6 (33.3%)

4 (22.2%)

Disagree

2 (11.1%)

8 (44.4%)

2 (11.1%)

4 (22.2%)

6 (33.3%)

Don’t know

2 (11.1%)

2 (11.1%)

4 (22.2%)

–

4 (22.2%)

Agree

Table 5.2b Managers’ perceptions of self-management in Serbia (n = 18)

–

4 (22.2%)

–

–

Strongly agree

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leadership of Nezavisnost. General Secretary Slavko Luković, referring to the union’s position towards the possible creation of works councils at enterprise level, states that the union neither supports nor rejects the creation of works councils. He argues instead that the union should always maintain its independence where works councils exist, primarily because ‘works councils are associated negatively with the self-management of the past’ (author’s interview notes). While remaining ambivalent towards a works council route, the union has kept the door open to partnership discourse with employers. Its industrial policy calls both for social dialogue at the national level and for: … an equal partnership with (managers) and trade unions, to resolve possible industrial disputes through negotiations and, on the whole, encourage workers to express their creative abilities and initiative, to encourage them to give the most in their work and to develop a sense of attachment to the company.12

However, we have already suggested, and as Fritz (2000) argues, such a collaborative strategy is probably an illusory path for industrial reform within the harsh economic Serbian environment. Despite such reservations, the process of demanding dialogue in transformation states may not be directly comparable to similar demands in the West. For unions in the CEE and Balkans, the demand for dialogue with the state and employers is part of an emerging search for political legitimacy (Meardi, 2004), not easily placed within traditional corporatist frameworks applied in the West, where neo-corporatism was developed in different socio-economic conditions and within different state traditions (Crouch, 1993). Quite tellingly, the Serbian experience is in direct contrast to that of Slovenia, where selfmanagement also existed but where a system of works councils is now firmly established within the institutional framework. Crowley and Stanojević (2009) have argued that the legacy of self-management, and the subsequent confidence and authority it gave to organised labour, is a factor in determining the gradualist and neo-corporatist path in Slovenia. Arandarenko (2001) similarly argues that the establishment of a works council system in Slovenia is a response by the state to labour’s relative ‘strength’ in that part of the former Yugoslavia whereby the state has since sought to buy social peace with the creation of strong institutional mechanisms of social dialogue. However, Slovenia was historically (and still is) the wealthiest region per capita of the former federation, and both state and employers have more room for manoeuvre and less need for a strategy of capital accumulation based on labour subordination than would be the case in Serbia. In the Slovenian case, institutional formation around the works council model was a strategic choice made possible to the social

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democratic inclined ruling political elite. These values, a ‘conscious choice’ of the dominant political party leadership (Bohle and Greskovits, 2007: 109), were utilised by the state to neutralise any conflict through the institutional channels of works councils, a tripartite Economic and Social Council, and centralised wage bargaining (Feldmann, 2006: 849). As such, this gradualist option was possible because of the relative strength of the economy and was chosen to ensure societal consensus through labour incorporation (Šušteršič, 2000; Rojec et al., 2004). This contrasts with Serbia where the political schism between Milošević and the popular opposition led to revolutionary calls for those factory bosses who supported the regime to be cleared out of the enterprises. Transformation thus began within a conflictual framework. The dependence of Serbian capitalism on FDI also makes the state more amenable to the agendas of MNCs, who may wish to engage labour on the basis of low cost and maximum management control of the labour process. Prospects for a consensus-based employee relations regime (and its social democratic inflexions) are therefore less likely than in the case of Slovenia. Interestingly, in Montenegro, the Montenegro Confederation of Trade Unions (SSSCG) has taken a different course from both the Serbian and Slovenian examples. The main union federation (SSSCG) has adopted a policy position of complete opposition to the works council route. This decision has been taken to maintain the independence of the trade union from employer and state with the union federation opting for the British model of independent shop steward-based unions in preference to the German one of co-determination and works councils (author’s interview notes). The downward wave: clientelism and accommodation The differing political ideologies which have framed the evolving union movement raise important questions about the relationship of unions to the state. In the years under Milošević, centre–left opinion in the opposition movements was fired by an alternative vision to the communist command-economy model. As we have already suggested, this vision appeared as a social–democratic society based on the West European model, with labour-oriented parties operating on a consensus basis with employers within a ‘market democracy’. A strong intellectual current developed around this theme and crossed over from academics to trade union leaders and political leaders (see Marković, 1996). In terms of political economy, it strongly resembled conceptions of the social democratic ‘third way’ associated with Anthony Giddens (Golubović, 1996). Strongly influential in this process were political organisations such as the Socialist International and social democratic research institutes such as the German-based Friedrich

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Ebert Stiftung, which has its own office in Belgrade.13 However, such a vision was not necessarily shared by the emerging political elites in Serbia, who may have spun rhetoric about giving protection to workers and their unions but in reality were tied to the imperative of the marketplace in the new global and highly competitive economy. The prospects for a social democratic nirvana were grim, especially as leading social democratic politicians and parties were already in the process of accommodating to neo-liberalism in its West European heartlands. In such a situation, the union federations sought to ally themselves with political parties more in hope than as a determined strategic choice. Such hope was accompanied with a continued reliance on state patronage for the union movement (a common feature of unions in post-communism) rather than an attempt to create independent force through the establishment from below of collective bargaining in the non-state sectors (Frege, 2002). There are, however, exceptional cases where the trade unions have been successful in signing collective agreements in the private sector. One important agreement is in the country’s biggest export factory, the US Steel plant in Smederevo, 24 miles south-east of Belgrade. A collective agreement covering 6,000 workers was signed with the new Pittsburgh-based owners during the privatisation process when the plant was bought from the Serbian enterprise Sartid in 2001. A bitter struggle over jobs took place two years later in 2003 at the steel plant as 450 employees were sacked as part of the postprivatisation restructuring process (Scherrer, 2003: 7–8). Interestingly, the dispute was supported by both Nezavisnost and the SSSS. In the public sector, where union density is higher, more collective agreements have also been established. The most recent is in the education sector where in January 2009 an agreement was signed for the first time between two independent education unions, the education branch of Nezavisnost and the state authorities. We have already mentioned that an affinity between union and state (expressed through alliances or agreements with individual political parties) can also lead in ‘transition’ economies to forms of authoritarian corporatism whereby union leaderships linked to political parties in power find themselves unable to extricate themselves from policies which attack workers’ rights or interest. This is particularly so when trade unions, sensing their own potential weaknesses in a precarious economic situation, seek to gain protection from a political party irrespective of the party’s commitment to the workers’ cause (Mihajlović, 2006). In reality, successive governments sought to embrace neo-liberal policies designed to deregulate the labour market and/or to marketwise society through privatisation, public sector ‘modernisation’ and the withdrawal of state subsidies to individual enterprises or industrial sectors. In the immediate aftermath of

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the October 2000 Revolution, both the independent unions and the SSSS were opposed to the processes of privatisation, fearful as they were of the consequences for jobs and pension rights. Outbreaks of demonstrations and factory occupations against redundancies were commonplace, such as in the large Klug textile factory in Belgrade. However, the dominant political discourse (as in all transformation countries) was pro-privatisation and pro-FDI, and this, combined with pressure from the international financial institutions, made it more and more difficult for worker-based oppositionist voices to be sustained. In such fashion, Serbia’s political elites, encouraged by the international financial institutions and other external agencies, were united in their goals of abandonment of command economics in favour of free market capitalism under such pressure, and in the context of continuing economic difficulties in the new Serbia, the trade union leaderships of all federations, whether or not linked to political elites, moved to a position of conditional support for privatisation. As a result, the unions have placed themselves in a difficult position within the state–market– society triangle with a contradictory identity of being pro-(free) market while at the same time seeking to defend workers’ interests that have been threatened by those self-same market forces. Unions’ alliances with various political parties and factions continue to place them in a position of being either pro- or anti- the prevailing party in power – not on the basis of defence of class interest but instead on the basis of factional interest between the national political elites. As a result, the unions have to a large extent foregone their autonomy and independence from the state, which has left them marginalised, disarmed and potentially demobilised when faced with the need to construct a sustained defence of workers’ rights, and both economic and social justice (Mihajlović et al., 2004). Arandarenko and Stojilković (2006) go so far as to suggest that ‘the trends are such that ASNS shows clear signs of secular decline, SSSS of leadership and organizational crisis, and Nezavisnost that of stagnation’. Furthermore, ‘...there are clear centrifugal tendencies within SSSS, with many local organizations avoiding or openly refusing to finance the operations of headquarters’. A secondary and no less negative side effect of the union federations’ increasing dependence on political patronage is the antagonism between the federations on a political and organisational level, which is further heightened by disputes over the trade union property and real estate inherited from former times (the Serbian state having granted rights of continued ownership exclusively to the SSSS). Rather than unions working in solidarity, they often work on the basis of division, thus weakening both their potential associative and bargaining power. As collective agents within civil society, the unions further risk failing their task of representing workers.

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Workers and revolution in Serbia Some concluding comments

What we have described and analysed is the rise and fall of worker combativity through and beyond the October 2000 Revolution. Having overcome the distraction of nationalism, workers and ordinary people turned to face the injustices of the Milošević regime. In doing so, they created not only a revolution but also a new and independent workers’ movement. However, the goals of this movement, in terms of the driving force against austerity, war and inequality, were frustrated by the aftershocks of the state’s turn towards full-blooded neo-liberal solutions to Serbia’s economic plight. There appeared to be no room for social democratic forms of social dialogue and partnership and so unions turned increasingly to clientelist models of political practice, a strategy which again fell on stony ground. The consequence of such disappointment was a downward wave of combativity and an inward turn towards fragmentation and division. The cycle of contention subsided. However, the inability of workers to express their hopes and aspirations through organised channels appears to have sparked a new wave of protest, sometimes involving non-conventional forms of action. We record these developments in the final chapter. Notes 1 Harvey’s analysis has also been refuted by Harman (2007) on logistical grounds. Harman argues that dispossession is not valid as it cannot enable the capitalist class as a whole to accumulate. Furthermore, Harvey may be wrong in claiming that the officious process of ‘primitive’ accumulation which he associates with contemporary ‘dispossession’ had ever gone away in the ‘golden age’ and beyond. Primitive accumulation certainly existed in the post-war colonies and has arguably been a feature of the period of rapid industrialisation in both the Soviet states and post-1978 China. 2 Economic Institute in Belgrade, cited in Nikolić (2002). 3 Documentation of the energy-based trade union EPS. 4 www.sindikat.org.yu/TEMPO/Medjunarodna_files/e_public.htm#LEAD accessed 16 February 2009. 5 Otpor! grew to have a network of branches throughout Serbia. One of its leaders later became a government minister. 6 Formerly the ICFTU – International Confederation of Free Trade Unions. 7 http://72.30.186.56/search/cache?ei=UTF-8&p=serbia+trade+unions&rd= r1&fr=yfp-t-827&u=www.usaid.gov/policy/budget/cbj2004/europe_eurasia/Serbia.pdf&w=serbia+trade+unions+union&d=GBNH8AYSNug&icp=1&.intl=uk accessed 16 February 2009. 8 Conclusions of International Conference on Trade Union Strategies in the Process of Economic Reform (Belgrade, 24–25 January 2002). UGS Nezavisnost, Belgrade.

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9 www.icftu.org.uk (Serbia and Montenegro: Annual Survey of Violations of Trade Union Rights, 2004). 10 See http://www.asns.org.yu/english/labour-party.htm. 11 Personal interview notes with union leaders. 12 From An Engineering Industry for the New Century, Belgrade, Nezavisnost Conference Report 2000 available at www.nezavisnost.org.yu. 13 A key Conference on this theme ‘Social Democracy in the Nineties’ was organised by the Friedrich Ebert Stiftung and the Belgrade-based Institute of International Politics and Economics in 1991.

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6

Serbia’s new period of crisis

In this book, we have focused on the life and times of ordinary workers under both Tito and Milošević. We have tracked the developments in the Serbian economy since the October 2000 Revolution and attempted to describe the impact of the ongoing economic difficulties. We have adopted this objective because the revolution against Milošević was at its very core generated by ordinary people who wanted a better future after the years of civil war, nationalism and austerity. The demands of the revolution focused on democracy, freedom of expression and freedom of association. It was a political rather than social revolution, in the sense that regime change was the main objective rather than workers’ revolution and the overthrow of property relations. However, despite the limited (but fundamentally important) objectives of the movement from below, we recognise that all spontaneous revolutionary upheavals change the world view of those taking part. Consciousness takes a leap forward, and the workers who acted to bring down the Milošević regime will have wished for a better present and a more optimistic future for their sons and daughters as a result. But when we talk of consciousness, we must also be aware of the legacy of the past, or, as Marx phrased, ‘The tradition of all the dead generations weighs like a nightmare on the brain of the living’. In chapter 2, we pursued this legacy by examining in depth the experience of workers under Tito and self-management. We drew a number of conclusions. First that while the Tito–Stalin split was a positive development in terms of workers’ self-determination, Yugoslavia under Tito remained a Stalinist-inspired state with authoritarian elements. Self-management was a creature created to modernise Yugoslav industry first and foremost and to raise workers’ understanding of the problems of the enterprise as a secondary impulse. As self-managed enterprises were given increasing scope and flexibility to run their sales and marketing, they became part of the market and in so doing drifted further and further away from the concept and praxis of workers’ control. In the end, the workers councils appeared to have mutated into works councils, of the consultative variety dominated by technicians,

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managers and party members and exclusive of workers themselves. Indeed, the legacy of the experience for workers appears at best neutral and at worst negative, as our short survey indicated. However, we have also recorded how the dreams of ordinary people in 2000 have not been fulfilled. Serbia’s economy, while allowing for some growth in the years immediately after the revolution, faltered badly again in the aftermath of the financial crash of 2008. The economic growth that had occurred has been fuelled by external credit rather than internally generated new investment. Low levels of employment, high levels of informal working and increasing poverty are apparent. As a result, the economy exhibits unsustainability, which has been further exposed by the financial crisis. The response of the Serbian governments, spurred on by the orthodox neo-liberalism of the international financial institutions, has been yet more prescriptions designed to privatise assets, reduce the size of the public sector and reduce pensions and social welfare. The end product has been further immiseration of the working and non-working population. Thus we have seen the development of two distinct phases of worker protest. First was the movement from below, beginning in the late 1990s, that brought regime change and sought some retribution for the wrongdoings and maltreatment of employers and government authorities. This first phase of upward mobilisation was characterised by demands for both political and economic freedom, by recasting the nature of the ruling regime and discarding discredited bosses in the factories who were closely associated with that regime. The second phase has been characterised by a battle over the injustices generated by the processes of privatisation as insiders sweep up the assets and avoid their responsibilities to the workforce in the process. This second phase was also characterised by the growing clientelist alliances formed between the different trade union federations and political parties, in a failed effort by the unions to pursue a state capture strategy that would be to their advantage. The difficulties for the unions in engaging politically within ‘civil society’ were also evidenced by the failure of mechanisms and processes of social dialogue to ameliorate their position. This was indeed a period we can describe as a downward wave for the workers’ movement. It is worth returning to examine in more detail how these new societal struggles have developed, and it is here that we now turn. Explaining the fiasco of privatisation Despite the Serbian government’s efforts to realise the value of its assets through the prescription of privatisation, the programme appears to have failed to be a launch pad for the hoped-for export-led economic success, as the continuing and ever-deteriorating imbalance between exports and

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imports would testify. Privatisation produces only a ‘one-off ’ benefit in terms of state finance. This limitation, together with the undervaluation of many of the state assets put out for tender, has meant that in the medium term, privatisation has exacerbated rather than solved Serbia’s economic woes. More importantly, the failures of the privatisation process have created a sharp divide within Serbian society, fuelling worker discontent with suspicions of corrupt practices compounded by failed deals and nonpayment of wages and salaries. Indeed, concern with corruption and lack of transparency is to the forefront. The Serbian government has created a range of anti-corruption measures and institutions under encouragement and guidance from the United Nations Development Programme (UNDP), including an internal anti-corruption task force and measures to depoliticise the civil service. But action on the ground appears slow and constrained by lack of resources. An independent report on progress commissioned by the UNDP in 2007 concluded that ‘Although there have been major improvements in a range of development areas in recent years, progress in respect to mitigating corruption has been partial and slow’ (UNDP, 2007: 5). In addition, the resources, both technical and in terms of manpower, available to the police force to investigate corruption were found by the report to be ‘not sufficient’ (ibid: 23). Serbia was still ranked 78th out of 178 countries in the Transparency International Corruption Perception Index in 2010. We indicated in chapter 3 that the orthodox accounts of the failures of privatisation are focused on reform blockages and cultural explanations as explanations for the persistence of bribery and corruption associated with ‘wild capitalism’. Thus more reforms are postulated as the solution. In terms of ‘cultural’ difficulties, the IFIs have adopted a more refined approach whereby they suggest in research and policy documents that ‘political economy’ is an important contextual restraint, creating as it does complexities and ambiguities in programme delivery. The Bank now advocates policy based on ‘political economy’ because: Development practitioners engaged in policy dialogue often have in-depth knowledge about the political economy of the contexts where they work, but their expertise tends to remain ‘hidden’ due to the sensitivity of such issues in an ostensibly technical relationship with the client government. (World Bank, 2008b: i)

In consequence of this attitudinal change, the bank is now more willing to engage at minimal level with agents within civil society in the process of ‘participatory’ change in policy. Thus, in its 2008 report, the World Bank refers to ‘… the experience of operational teams that work in complex political economies’ (2008b: i). However, as Upchurch and Weltman (2008)

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have argued through textual analysis of World Bank and IMF documents, such focus on ambiguity and complexity represent little more than a form of ‘utopian liberalism … (whereby) a false harmony of interests is presumed between capital and labour that in reality cannot be bridged’. Given this obfuscation of reality, it may not be so surprising that the World Bank and other agencies continue to struggle to explain the ‘dysfunction’ caused by privatisation and wild capitalism addressing the problem through the lens of further market tampering. In the search for explanation, we have argued that we may need to view wild capitalism not as a temporary deflection from normative market efficiency but rather as a permanent or embedded feature of transformation in states such as Serbia. But what of the prospects for a new upward wave of mobilisation that confronts such dilemmas? The workers’ response: a new upward wave? We have recorded that the workers’ response to the continuing crisis in Serbia reflected the structural weaknesses of the union movement signalled by its continuing relationship (formal and informal) with parties committed to neo-liberalism. This was most thoroughly exposed in disputes over jobs and wages that occurred soon after October 2000. In October 2001, for example, exactly one year after the revolution, the Kolubara miners were again on strike over redundancy provision but were defeated after the new government pressurized them to call off the strike in the ‘national interest’. Different union federations and enterprise-based unions also quickly found themselves compromised by their individual relationships with political parties both in government and opposition, such as the union at the Nikola Tesla thermal power plant in Obrenovac, which had aligned itself to the Democratic Party, and the union at the Kostolac power plant near Požarevac, which had traditionally been under the control of Milošević’s old Serbian Socialist Party. A major strike also took place in the Kluz parachute factory in Belgrade during 2003. The strike, involving 10,000 workers, lasted most of the year and involved the two federations ASNS and SSSS. The dispute, spurred by privatisation, focused on mass redundancies, ‘forced vacations’ and violations of labour rights. Particular anger was directed against the alleged haughty and arrogant behaviour of the company bosses, which included constant bullying and harassment of the workforce in the run-up to redundancies. Education workers also took mass action in defence of their jobs in this period (we referred earlier to the IFI ‘conditionality’ of labour force reductions in this sector), and in 2007 administrative staff in the court services took strike action. Any institutional routes, through processes of ‘social dialogue’ or collective bargaining, appear to be blocked or limited in their applicability due to

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the shallow nature of bargaining relationships. If our analysis of labour exploitation is correct, such blockages to institutional solutions should come as no surprise, given the state and employers’ drive towards creating the preconditions for such labour exploitation to persist. The continuation of a large informal economy and high unemployment also militates against any prospects of national collective agreements over pay and conditions taking root for most workers. What we have observed, however, is sporadic outbursts of militant activity combined with (often) desperate cries for attention to the workers’ plight. Most notably, privatisation, and the associated wild or crony capitalism, has been much contested within Serbia, with vacillation among the union federations as to the degree of conditional support or opposition they should offer to the privatisation process. On the one hand, privatisation may be seen as a lever by unions to ensure payment of wage arrears and to provide some chance of a secure employment future. On the other hand, privatisation may be associated with the abandonment of pension provision and potential unemployment should the former state-owned or socially owned enterprise be restructured. But particular rancour is reserved for those employers who are alleged to have abused the privatisation process for personal gain. In some of these cases, privatisation and the problems of insider dealing and corruption surrounding the process have led to rank-and-file direct action against the ‘owners’. One example comes from the pharmaceutical factory Jugoremedija, which in March 2007 became the first enterprise to be controlled by its workershareholders following occupation of the factory. The occupation followed an earlier dispute in 2004 and by workers, of whom almost three quarters are women, chaining themselves symbolically to the factory railings (Grdešić and Meszmann, 2009). The 2007 dispute between the workers and management first began after the state sold its 42 per cent shareholding in the firm to an indicted criminal. Complaints of contract violation and concerns over financial processes soon followed. Below is an open letter produced by workers at the factory and published by LabourNet.de in January 2008 and supported worldwide by intellectuals such as Immanuel Wallerstein and Noam Chomsky.1 The content of the letter gives further insight into the workers’ perceptions of privatisation.

Workers-shareholders of Zrenjanin factories Bek and Shinvoz Dear friends, A year and a half ago, more than 60 prominent intellectuals and activists of the world supported the struggle of the workers-shareholders of Zrenjanin pharmaceutical factory Jugoremedija. That support was key

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to the most important victory of Serbia’s workers over the past eight years: on March 1st 2007, Jugoremedija became the first factory in Serbia controlled by its worker-shareholders. Today the Jugoremedija worker-shareholders are supporting the struggle of other Zrenjanin workers for their rights. We are asking you to read the following description of the circumstances that forced us to occupy our factories and to start the fight for our right to work and live a decent life. Zrenjanin, the city that used to be the industrial core of Yugoslavia, has now an unemployment rate of 35%, according to official data. Most of the factories that Zrenjaninian workers built during socialism and lived off for decades are closed today. Seven years ago, during the beginning of the transition in Serbia, neo-liberal experts warned us that the entire Serbian economy would be forced into bankruptcy unless it was privatised as soon as possible. This is how Shinvoz, a company producing and repairing trains and locomotives, was privatised in 2004. The meat processing plant Bek was privatised one year later. Despite privatisation the neoliberal threats came true: both companies went bankrupt. To someone not well informed about the situation in Serbia, it may seem strange that the new owners forced their companies into bankruptcy. There are very simple reasons for this. Let us explain two of them: Privatisation in Serbia decreed that a minority of shares should be distributed to the workers of the company (in Shinvoz they have 44% of ownership, in Bek 30%). Although the majority shareholders can control the company, it remains impossible to control it absolutely as long as the workers are co-owners. Serbian bosses therefore use a simple tactic: they appoint management with no worker-shareholder representatives and use this absence of control to make bad business deals through which the company becomes indebted. Yet the trick is that the debts are to shell companies owned by the same person. When the factories go bankrupt, they can, as owner of the shell companies, rebuy them on the grounds of debts, this time with 100% of the shares. The collective contract between union and management that protects the rights of workers in Serbia is cancelled when the company goes into bankruptcy. All workers are laid off and the union ceases to exist. When a former major owner regains the factory after bankruptcy there is no more collective contract and the owner chooses whom to re-employ. Any union that is reinstated will be under full control of the boss and his/her new management. The fact that the main creditors of Bek and Shinvoz are the same people that privatised our factories and led them into bankruptcy through their mismanagement, is evidence of the reasons explained above. After the workers-shareholders of Jugoremedija fought for their rights and showed all workers in Serbia how solidarity and persistence can be effective, the

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workers-shareholders of Bek and Shinvoz started the fight for their own factories. The occupation of Bek began on October 8th and that of Shinvoz on December 28th 2007. Through pressures on the Privatisation Agency to stop breaches of contracts and illegal activities in our factories, the privatisation contract was cancelled at Bek, thus returning 70% of capital back to the state. Although the government admitted that their tolerating of illegal activities contributed to Bek’s bankruptcy, it still refuses to take responsibility for it. The government also refuses to work with workersshareholders towards the recovery of the factory, thus not protecting its 70% of capital, which, as public funds, belong to all Serbian citizens. In Shinvoz, the Privatisation Agency established that the majority owner breached both the privatisation contract and the law. Yet it didn’t cancel the contract with him. On the contrary he was awarded a delay of 15 days to ‘correct his errors’ and to make the obligatory investments (3 years too late!) in the very corporation that he led to bankruptcy. On January15th, over 1000 worker-shareholders from both factories are going to Belgrade’s Union Hall. They will remain there until Shinvoz’s privatisation contract is cancelled and an agreement with the government is reached about how both companies can get out of bankruptcy. We ask for your support in our struggle by appealing to the president of Serbia, Boris Tadic, as well as to the relevant government institutions. They must accept our demands and participate in the recovery of companies that are out of business today due to the illegal activities of their major owners and to the inefficiency of government institutions supposed to control the respect of the law and the privatisation contract. Yours truly, Protest Board of worker-shareholders of Bek and Shinvoz Milena Prstojevi Mita Lisica Following the initial 2004 protest by the workers, a long-drawn-out legal process began to assess the workers’ claims, and the occupation and appeal was a tactic employed by the workers to speed up the judicial process. At first, the courts ruled in favour of the employers, but this was overturned by an appeal to a higher court. As Grdešić and Meszmann (2009) report, the workers saw themselves as defenders of the local community and town, supported with ‘patriotic sentiments’. The divisiveness of the struggle was, however, apparent in the lack of supportive media coverage, while the employers and local politicians condemned the occupation: some media and the other trade union of being anarchists, self-managers, Stalinists, members of a violent religious sect, but radical extreme nationalists

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as well. The usual portrayals depicted organized workers and subsequently their demands as irrational. Worker activists, also owners of company shares, soon realized that they needed to overcome the negative public portrayal in order to make their cause stronger. Therefore when formulating demands, they decided to concentrate on the issue of private property, as the unquestionable pillar of the rule of law.... (Grdešić and Meszmann, 2009: 14)

The national trade unions also only offered verbal rather than financial support, and most support came as a result of the appeal from NGOs, the national Anti-Corruption Council and local branches of unions. The workers subsequently formed their own political party. As we have also recorded, the difficulties inherent in the privatisation process were compounded by the financial crash of 2008. The likelihood of further sales of state-owned enterprises was diminished by the crisis, even if shares were to be sold at undervalued asset prices. The seriousness of the effects of the global financial turmoil was shown in January 2009 when the Economy Minister Mlađan Dinkić announced that the Fiat– Zastava deal would be put on hold as a result of the financial crisis, with a ten-month postponement of the contract.2 The Serbian Privatisation Agency also reported in August 2009 that a quarter of privatisation contracts had fallen through as new owners failed to honour the deals. In the summer of 2009, workers’ general discontent over the emerging privatisation fiasco gave birth to a new wave of strikes. Local press agencies reported that most of the strikes, involving over 30,000 workers in 40 to 45 enterprises, were directed at privatised concerns where employers had not paid salaries or health and pension benefits for some months.3 The workers involved, led by hundreds of factory staff from auto parts producer Zastava Elektro complaining they had gone unpaid since the start of the year, also took their protests to the streets by blocking traffic around the office of the Serbian Privatisation Agency and other key buildings in Belgrade. In Lapovo, 150 km south of Belgrade, workers from a newly privatised auto parts manufacturer lay across the main railway line in protest at unpaid wages. News agency IPS reported an interview with one worker, Stevan Sreckovic from the Ikarbus bus factory in Zemun: ‘We are desperate, afraid for our future, betrayed by our new owner. Ours is one of a thousand factories throughout Serbia that have been ruined by privatisation’.4 More macabre protest also hit the headlines when Zoran Bulatović, a worker at the Raska textile mill in Novi Pazar, on hunger strike in protest against non-payment of wages, cut off two of his own fingers and (he claims) ate one of them.5 The mill used to employee 4,000 workers but has reduced its labour force to about 100, with claims of unpaid salaries going back as far as 1993. Following the protest, the national government began clearing the path to allow the local Novi Pazar council

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to take over ownership of the plant and pay the workers. The protests were clearly focused on the deleterious effects of privatisation on ordinary workers and the ‘malfeasance’ of public officials and private entrepreneurs involved in privatisation. New owners were clearly engaged in asset stripping. In March 2009, machinery from a privatised textile factory in Leskovac, south of Belgrade, was taken by its Cypriot owner to Romania, and in May, workers at the 7.Juli textile factory in Kursumlija discovered that the Serbian owner had sold the machinery abroad as scrap.6 Wherever next? We can see that the workers’ movement in Serbia has faced great difficulties since October 2000. The structural disadvantages created by a state and employer strategy of extensive labour exploitation, combined with high unemployment and a burgeoning informal economy, have left unions in a weak position to defend their interests. At the ideological level, unions have drifted into various forms of accommodation with political parties that are themselves committed to the dominant neo-liberal market vision. The ideological space for resistance is narrowed as a result. Trade unions also struggle with a negative legacy of the communist past (even though the precise nature of this legacy is difficult to assess). Neither can unions in Serbia look forward to any ‘march through the institutions’ of social dialogue, as the clientelist nature of political discourse in Serbia appears in the immediate future to militate against any form of supportive pluralist or traditional social democratic framework. In this sense, Serbia shares the fate of many other union movements in transformation states, whereby state and employer utilisation of neo-liberal reform programmes and the fragmentation and unwillingness of these actors to engage seriously with the unions has led to what Ost (2000) describes as ‘illusory corporatism’ and Pollert (2001) depicts as a ‘fragile shell of tripartism’. To restore the spirit of October 2000, the workers’ movement needs to develop a strategy that directly challenges the ideological frame of the Serbian state and its associated capital bloc. The workers’ movement would thus need to develop as an independent force, free from bargained accommodation with neo-liberal political parties. We would need to sense a reversion to affections for a new ‘common moral economy’, so well outlined by E.P. Thompson (1971) in studies of earlier periods of labour movement formation. Such movements of the dispossessed expressed not only economic concerns but broader categories of the human condition embracing social and political justice. Protest movement theorists such as Charles Tilly (1978) and Sidney Tarrow (1998) developed constructs to analyse the ingredients of such successful movements from below.

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Political framing, political opportunity structures, repertoires of action and cycles of contention are all now well-understood tools of analysis. Tilly (1978), for example, drew on the history of protest in Britain and France to highlight the importance of two dimensions which shape success or failure of modern social movements such as trade unions. The two dimensions to examine are the relationships between the challengers to authority and the authorities themselves (e.g. the state) whereby the challengers must judge the opportunity–threat and the authorities determine the subsequent degree of facilitation–repression. Authorities might seek to repress emerging movements or develop institutional structures to contain and ‘process’ conflict. We have already observed in Serbia a ‘cycle of contention’ that begun in the late 1990s as workers challenged the Milošević regime in claims for democracy and freedom of expression. After 2000, we can discern repression of the activities of the unions at the level of workplace conflict combined with facilitation in terms of incorporating unions at leadership level into the confines of political party structures. As we identified in chapter 4, this process is markedly different from that which has occurred in Slovenia, where the institutions of works (rather than workers’) councils have been established, or even Croatia, where national systems of ‘social dialogue’ appear more advanced. The difference must be explained by the more conflict-bound strategy of the Serbian employers and government under both Milošević and the successor regime, willing as they were to accommodate an extensive labour exploitation model in order to find their place within the global political economy. The cycle of contention culminated in October 2000 as new forms of political exchange were established. The cycle could only be ended by either reform, repression or, as in our Serbian case, by revolution. As Tarrow (1998) explains, in the ‘mobilisation phase’ of any social movement, the main processes that affect how the movement develops are the diffusion of protest across groups and space, the construction of new repertoires of action and frames of meaning and the emergence of new organizations and the transformation of existing ones. This was precisely what we saw in the brave days leading up to October 2000, when demonstrations, strikes, road blockages and so on dominated the political and social scene. However, during the downward ‘demobilisation phase’, social movements are often affected by other, negative processes such as polarisation resulting in the development of factions, a division over radical (violent) and moderate (institutional) forms of action as well as by the state strategies of facilitation and repression already described which, as Upchurch and Mathers (2011: 6) argue, in any in advanced capitalist societies ‘are mostly deployed in a selective rather than generalized way’.

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Of course, many of the problems that Serbian trade unions have in building a ‘movement’ are also apparent in other post-communist countries. Meardi (2011), for example, highlights the failure of social pacts, workers’ councils and social partnership approaches to deliver gains for trade unions and ordinary workers in accession countries. In chapter 4, we also referred to similar and more generalised processes of institutionalisation, containment and ‘authoritarian’ corporatism that have arisen in countries such as Poland and the Czech Republic. However, the beginnings of a new upward wave of mobilisation in such countries are discernible. In Poland, for example, at least until the financial crash of 2008, Hardy (2009: 9) notes that ‘trade union disputes were showing a qualitative change from defensive actions against redundancies and unpaid wages to offensive actions for higher pay and trade union recognition’. Indeed, the number of strikes in Poland, according to statistics from the General Statistical Office, rose from just two in 2004 to eight in 2005 and then to twenty-seven in 2006. More significantly, hours lost in strikes increased over the same period from 400 to 255,000 (Meardi, 2007). The severe effects of the financial crash in 2008 may well have shifted the focus of disputes once again to fight back against austerity measures. In Bulgaria, strike action took place in 2010 against the World Bank’s insistence that national railway companies should cut their staff by 30 per cent. Further mass strikes against austerity measures have taken place in the Czech Republic, where 150,000 struck in 2010 against civil service pay cuts,7 in Estonia against pay cuts for rescue workers8; in Romania, where workers blockaded government offices in protest at wage cuts9; and in both Latvia and Lithuania. Returning to Serbia we can see that the difficulties of re-establishing a radical workers’ movement with a clear programme of social solidarity and restoration of social ownership of production should not be underestimated. Alternative visions will persist to distract from such a project. Political discourse over the future of the economy and the region is already taking place within the region. One liberal democratic version of a new ‘vision’, for example, is the concept of ‘Yugosphere’, whereby the fractured region is pulled together again through trade and cultural links to form a more viable unit within the global economy (Judah, 2009). Some initial political legitimacy appears to have been given to this vision when Serbian President Boris Tadić, at the 2009 summit meeting in Egypt of the NonAligned Movement (NAM), floated the idea of holding the next summit in Belgrade with the help of other countries of the former Yugoslavia (none of which are in the NAM).10 The significance of this initiative nevertheless lies with the fact that the very first summit was convened by Tito in Belgrade in 1961. Rather ironically, the secretary general of the NAM from 2009 until its downfall was Hosni Mubarak of Egypt. Progress towards individual

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membership of the EU and activity through the Regional Cooperation Council formed in 2008 as a successor to the post-civil war Stability Pact is argued to encourage such a process of realignment among the former Yugoslavian states. But support for the idea of Yugosphere may not be as popular as initially suggested. Croatia, for example, now orientates its trade more on Austria, Germany and Italy than it does on Serbia or the rest of the former Yugoslavia.11 Apart from the benefits that are likely to accrue by a restoration of trade and supply networks within the region, such a vision does not confront the major economic and social difficulties confronting Serbia that have arisen as a result of its reliance on foreign credit. Such reliance on IFI support and from foreign banks appears as an addictive drug habit of the Serbian ruling elite. It might be tempting for the Serbian government to continue to prop up the dinar in order to maintain its credit ratings. Extended credit might then be used to stave off the financial crisis until better times. But it is clear that such a policy would be disastrous for the economy as a whole, simply because the foreign currency reserves that would need to be utilised to shore up the value of the dinar have themselves been accumulated through processes of borrowing. As an alternative, it is much more likely that the pressures towards consolidating the model of extensive labour exploitation will continue and that successive governments will attempt to squeeze the living standards and jobs of ordinary workers even more. But as we have attempted to describe, the resultant increasing immiseration of workers in Serbia may then yet lead to a new questioning of the dominant pensée unique of neo-liberalism and marketisation. Occupations, strikes, blockades and demonstrations are potent actions against the unrelenting power of capital. But they remain in the realm of the symbolic unless the key questions of social ownership and control of investment and production come once more to the fore. If this questioning translates into a new, third phase of worker resistance, we may begin to see parallels with the Latin American ‘Pink Tide’ of left advance whereby national governments, often with pressure from below in terms of factory occupations and popular protests, began to reposition themselves in the global economy by buffering the shock effects of neo-liberalism, eschewing the advances of the international financial institutions and re-regulating the employment relationship in favour of (limited) worker rights (Robinson, 2008). But as Robinson himself later notes, even the Pink Tide itself has floundered under further pressure from workers left stranded by ‘the structural power of transnational capital’ and its resultant increase in inequality.12 The choice, in terms of realpolitik, then becomes between one of moderating the worst effects of marketisation through a new framework of post-neo-liberalism or, as Robinson suggests, adopting a path of revolutionary transformation.

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Whatever the outcome of the Serbian workers’ movement and popular protest against neo-liberalism, we must recognise that Serbia remains in the maelstrom of the crisis of global finance. At the crossroads of the East and the West, the Serbian revolution also sits halfway temporally between the East and Central European Revolutions of 1989 and the Arab Spring of 2010–11. As such the outcomes and ultimate fate of the October 2000 Revolution will be subject to the wider sweep of history. Notes 1 Jugoremediju podržalo 40 svetskih intelektualaca, Danas, 20 July 2006, available at www.danas.co.yu/20060720/ekonomija1.html. 2 www.b92.net/eng/news/business-article.php?yyyy=2009&mm=01&dd= 20&nav_id=56553 accessed 6 August 2009. 3 www.ipsnews.net/news.asp?idnews=48254 accessed 3 September 2009. 4 Ibid. 5 www.balkaninsight.com/en/main/news/18545/ accessed 3 September 2009. 6 www.ipsnews.net/news.asp?idnews=48254 accessed 3 September 2009. 7 http://www.eurofound.europa.eu/eiro/2010/09/articles/CZ1009019I.htm accessed 25 July 2012. 8 http://www.eurofound.europa.eu/eiro/2011/02/articles/EE1102019I.htm accessed 25 July 2012. 9 http://www.eurofound.europa.eu/eiro/2010/10/articles/RO1010019I.htm accessed 25 July 2012. 10 The 2011 Summit did take place in Belgrade in 2011 (see www.rts.rs/page/ stories/sr/story/9/Politika/950474/Nesvrstani+ponovo+u+Beogradu.html). 11 http://croatiabusinessreport.wordpress.com/2010/07/30/the-yugospherefantasy/ 12 See ‘Latin America’s left at the crossroads’ at http://english.aljazeera.net/ indepth/opinion/2011/09/2011913141540508756.html.

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Serbia timeline

1892 1918 1939 1941 1942 1944 1945 1947 1948 1950 1953 1956 1957 1961 1963 1965 1968 1970 1975 1980 1989

1990 1991

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Josip Broz (later Tito) born in Kumrovec, Croatia. First Yugoslavian state (Kingdom of Yugoslavia). Tito becomes Secretary-General of the League of Communists of Yugoslavia. Runs an underground resistance. Yugoslavia falls to the Axis in World War Two. Partisan resistance. First meeting of National Liberation Council at Bihach. Red Army moves into Yugoslavia. Full recognition given to Tito’s Yugoslavia by the Allies. Nationalisation of major industries. Cominform headquartered in Belgrade. Tito–Stalin Split. Yugoslavia expelled from the Cominform, which moves to Bucharest. Introduction of workers’ self-management. Strikes in East Germany against wage norms. Uprising in Hungary. Ðilas publishes The New Class. Sentenced for seven years imprisonment. Major strike at Trbovlje coal mines. Founder member state of the Non-Aligned Movement. Praxis group begins to meet. Tito named President for Life. Economic reforms introduced to liberalise the economy. ‘Prague Spring’ in Czechoslovakia. ‘Croatian Spring’ movement in Zagreb calls for more Croatian autonomy. Praxis Group suppressed in Yugoslavia. Tito dies. Ante Marković leads government. Fall of Berlin Wall. IMF loan secured in Serbia. Law on Social Capital introduced, allowing conversion of socially owned enterprises into joint stock companies. Milošević assumes power in Yugoslavia. Milošević argues for ‘one person, one vote’ in Yugoslav parliament, which would consolidate Serb majority. Slovenia declares independence from Yugoslavia after ten day war. War between Croatian and Serbian groups after Croatia declares independence lasts until 1995. Macedonia also declares independence. Independent trade union Nezavisnost formed in Serbia.

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132 1992 1993 1995 1996 1998 1999 2000

2001 2003 2006 2011 2012

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Workers and revolution in Serbia Bosnian Serbs declare a Serb Republic. War in Bosnia follows. Major public sector strikes in Serbia. Dayton Peace Agreement signed in Bosnia. Demonstrations in Belgrade against suspected electoral fraud. War in Kosovo begins. Otpor! formed by students at Belgrade University. NATO bombing of Serbia. Milošević declares presidential electoral victory with suspicions of electoral fraud. Overthrown in October Revolution. Koštunica becomes President. Major write-off of much of Serbia’s debt by international donors. New Labour Law introduced restricting right to strike. State of Serbia and Montenegro declared, with Federal Parliament in Belgrade. Serbian prime minister Zoran Ðinđić assassinated. Montenegro declares independence. New IMF Stand By Agreement. Serbia becomes Official Candidate for membership of the European Union. Tomislav Nicolić of the Serbian Progressive Party wins presidential election.

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Index

Albania 20, 52, 60, 86 anti-fascism 19 Arab Spring 2, 10, 130 Argentina 25, 107 Arkan (Željko Ražnatović) 104 ASNS (trade union) 76, 101, 106–7 Austria 61, 129 Barroso, Jose Manuel 85 Belarus 97 Belgrade 3, 125 Human Development Index 60 strikes 100, 115, 119 Terazije Square 6 Ben Ali (of Tunisia) 10 Berlin Wall 13, 33 black economy 95 see also informal working Bosnia and Herzegovina 53, 77–8 Brandt, Willy 11 Britain 20, 32 Bucharest 22 Bulgaria 20, 128 capitalism crony 43 human resource management, of 29 logic of 26 uneven and combined development 49–50 varieties of capitalism 47, 94 China 70

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Churchill, Winston 18, 38 Cliff, Tony 23 COMECON 93 Cominform 20 Communist Party Britain 22 France 22 Yugoslavia 23, 34 corruption 41, 45, 65, 120 see also crony capitalism crony capitalism 43 Cvetković, Mirko 86 Czech Republic 128 Dayton Peace Agreement 33 Ðilas, Milovan 20, 24 Dinkić, Mlađan 67, 125 Djindjić, Zoran 4, 6, 8, 10 assassination of 11 trade unions 106 Djokić, Ljubisav ‘Jo’ 5 Dragutinović, Diana 83 Estonia 43, 94, 123 European Bank for Reconstruction and Development 81 European Trade Union Confederation 105, 109 European Training Foundation 59 European Union 42, 56 Fourth International 22 France 32

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148 de Gaulle, Charles 18 Germany 61, 129 Gini co-efficient 43, 93 Gramsci, Antonio 72 Greece 18, 20, 43 Habermas, Jürgen 11 Hadžić, Goran 85 Hervé, Pierre 21 Hungary 41, 52, 92 Ilić, Velimir 3 India 70 informal working 50–1, 59 see also black economy International Labour Organisation (ILO) 81 International Monetary Fund (IMF) 37, 62 cronyism 44–5 social policy 84 International Trade Union Confederation 73, 105, 108 Ireland 43 Italy 18, 29 Keynesianism 48 Klugmann, James 21 Kolubara 4, 7–9, 119 Kosovo 1, 10, 52, 66, 85–6 Koštunica, Vojislav 3, 5–10, 86 Labour Party (UK) 22 Lalovic, Slobodan 106 Lambert, Pierre 22 Latvia 42–3, 128 League of Communists (Yugoslavia) 1, 25, 51 position on strikes 33–4, 36 Lenin, Vladimir 5, 28 Lithuania 43, 128 Macedonia 53, 79, 86 Mandel, Ernest 22 Marhović, Mihailo 25

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Index Marković, Ante 37 Marshall Aid 18 Marx and Marxism 28, 36, 47, 118 Medvedev, Dmitry 57 Mihailović, Draža 18 Milošević, Slobodan 1–4 arrest 8 elections 5–6 Hague Tribunal 11 nationalism 37–8, 97 neo-liberalism 52 party rule 13 Mladić, Ratko 85 Montenegro 5, 53, 79–80, 113 Mubarak, Hosni 10, 128 Mucciacciaro, Evelin Toth 77 NAFTA 95 NATO 4–5, 53, 66 Nazis and Nazism 23 neo-corporatism 112 Nezavisnost (trade union) 81, 99–100, 104–8 Nicolić, Tomislav 11 nomenklatura 31, 51–2, 75 Otpor! 3–7, 9, 116 partisans 18 Podgorica 24 Poland 41, 128 see also Solidarnoşc (Poland) Portugal 43 post Washington consensus 70, 74 POUM (Spain) 24 Praxis Group 25 self-management 10, 102 compared to fabricas recuperadas 25 survey of 111–12 shock therapy 41 Slovakia 56, 107 Slovenia 38, 41, 47, 75, 92, 94, 112 social dialogue 77, 82, 88, 94–5, 127 Socialist International 113

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Index

149

Socialist Workers Party (Britain) 23 Socialist Workers Party (USA) 22 social movements 90, 96 Solidarnoşc (Poland) 2, 12, 90–1, 96–7, 107 Soviet Union 15, 23, 42 Spain 43 Spanish Civil War 19 SSS(S) (trade union) 76, 101–4 Stalin, Josef 17, 20–2 socialism in one country 28 Stalin–Hitler pact 19 Stalinism 26, 35, 118 Stiftung, Friedrich Ebert 115, 117

ITUC 105 Macedonia 79 Montenegro 78 political congruence 90 post communist 90–3 Transparency International 118 Trotsky, Leon 22, 48 Trotskyism 35 Trotsky, Natalya 22 Turkey 75

Tadić, Boris 11, 57, 86 Tito, Josep Broz 1–3 non-aligned movement 128–9 partisans 18–19 self-management 26–30 split with Stalin 1, 17, 19–20, 26–7 trade unions Croatia 77 ETUC 105

Venezuela 25

09_Martin_Index.indd 149

Ukraine 41 United Nations 120 USAID 77, 105

West Germany 11, 32 World Bank 44–5, 59, 70–2, 82 poverty reduction strategy 73–4 strikes against 128 World Health Organisation 83 World Trade Organisation 69, 80 Zastava factory 66–7, 101, 107, 125

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