The Same Mistake as Solidarity

Posted February 13, 2013

Categories: Blog, Eastern Europe, Featured, Uncategorized

Poland was unique in East-Central Europe for the size, strength, and pivotal role of its labor movement, Solidarity. In no other country in the region did workers take the lead in challenging the communist system. But that doesn’t mean that worker movements were not important in other East-Central European countries. In Bulgaria, for instance, Podkrepa was a key part of the opposition representing workers’ voices.

From the word “support” in Bulgarian, Podkrepa had its start in February 1989, before the spike in popular revolt. Later, as change accelerated in the country, it was a founding member of the opposition coalition known as the Union of Democratic Forces (UDF). Through “citizens committees,” Podkrepa campaigned on behalf of the UDF in the first free elections in 1990. By 1991, and the election of the first non-socialist government, Podkrepa formally withdrew from the UDF.

But those were challenging years for trade unions affiliated with the political opposition. There were fierce debates within the union over whether to be involved in formal politics. When opposition parties supported economic reforms that adversely affected workers, these debates became even more heated.

“We made the same mistake as Solidarity,” Oleg Chulev told me. “We participated in governments. I was the head of the national employment service for four years: at the time when the unemployment rate ranged around 18-19 percent. This led to shrinking membership. And the repressions at the enterprise level pushed a lot of people away.”

I met Oleg Chulev of Podkrepa back in 1990, when it was a relatively young organization. Since then he has continued to work with the union and has also participated in government, heading up the national employment office.

Our conversation focused on what workers have gained and lossed in Bulgaria over the last couple decades. “The hired labor force now has the freedom to choose what to study, where to study, what to work, where to work,” he told me. “They have the freedom to move. But this comes with a price.”

That price can be measured in different ways: “If you consider the standard of living in Bulgaria now and back then, you’ll see that people live better now. They have a higher standard of living. But there was no unemployment back then. There was so-called artificial employment for all. Now, the GINI coefficient can be felt by the man on the street even if he doesn’t know what this coefficient is. The gap between the rich and poor is much higher now in material terms than the gap between the nomenklatura and rank and file was back then. The insolence of the new rich is no way smaller than the insolence of the party nomenklatura was back then.”

Our conversation ranged from how economic reform could have been done differently in Bulgaria and the failure to create a Labor Party to labor-market policies and the impact of the European Union on the Bulgarian economy.


The Interview


Do you remember where you were when you heard the news of the fall of the Berlin Wall and what you thought about it?


It was the evening, and I was sitting with friends at home. And it was a big joy. But it wasn’t as unexpected as one might think. It was just a matter of time. It was already happening in our minds. We used to say that Gorbachev shouldn’t stop. But even if he did, he would only delay this process.


When did you first become involved with Podkrepa?


It was in the spring of 1989. I got in touch by phone. There was no other way to get in contact at that point. My affiliation with Podkrepa back then was personal: signing the declaration of support of Podkrepa. I joined the organization in October 1989 when we started meeting with people from other cities in Sofia. This is when we founded the teachers’ trade union as well. In November, we officially founded it, at a press conference.


You’ve been affiliated ever since?


Yes, since the beginning of October in 1989.


It is often said that the people who lost the most during the transition are workers. Do you think that’s the case?


Yes, if by workers, you also mean not just blue-collar workers but also teachers and clerks. They were lied to. Of course, they didn’t have much to lose. They lost the illusion of security, the illusion of equality. Materially, they are not worse off now. But they lost the feeling that they could do the same job in the same place for the rest of their lives. They lost the feeling that if they were qualified for a job, they could always have that job.

They also lost security in real terms. If you consider the standard of living in Bulgaria now and back then, you’ll see that people live better now. They have a higher standard of living. But there was no unemployment back then. There was so-called artificial employment for all. Now, the GINI coefficient can be felt by the man on the street even if he doesn’t know what this coefficient is. The gap between the rich and poor is much higher now in material terms than the gap between the nomenklatura and rank and file was back then. The insolence of the new rich is no way smaller than the insolence of the party nomenklatura was back then.

However, when one loses, one gains too. We often don’t know what we gain when we lose. The hired labor force now has the freedom to choose what to study, where to study, what to work, where to work. They have the freedom to move. But this comes with a price.


Are there any things you would have done differently from a trade union point of view?


Plenty of things, starting first of all, with the privatization process. Privatization was carried out unfairly. Well, fairness and unfairness are emotional characterizations. Let’s say, rather, that it was non-transparent. The winning bidders were known in advance. Enterprises were not sold so that the factories could continue working. Rather, the new owners cashed in the mortgages and took the money. There were no safeguards to preserve the workplace and the jobs.

There are so many examples. There was the sale of the national refinery to Russia’s Lukoil, which made Bulgaria dependent on this company. There was the sale of the Bulgarian national carrier, Balkan Airlines, which went bankrupt after its purchase. With the privatization of mines and metallurgical companies, the new owners, instead of modernizing manufacturing and making it more environmentally correct, squeezed out as much money as possible and then went bankrupt.

This all resulted in structural unemployment. The government kept giving bonuses to employers through tax benefits and by reducing the insurance contribution rates. They ended up creating the so-called bad debt millionaires by providing them with a state guarantee. These bonuses given to the employers didn’t go to creating jobs or higher salaries. Over the last 7-10 years, businesses failed to pay $10 billion in taxes. And instead of raising salaries, they bought yachts and Bentleys.

Plenty of things could have been done differently. The fact that we were half a trade union, half a political organization: now I can say that this was a mistake. Back then, however, this may have been necessary. Together with Fratia in Romania, we were the first two trade unions after Solidarity. Fratia consolidated with the former government trade union and lost influence in society. And now there are other strong players in Romania. Despite the errors that we recognize now in our political commitments, Podkrepa managed to preserve its influence.

Only very late did we learn the lesson that it’s not so important who is in power but how they exercise this power. Currently the members of Podkrepa do not vote for socialist parties and will not vote for the Bulgarian Socialist Party (BSP). But if we consider the economic claims of Podkrepa, they are much further to the left than the Socialists. It can’t be otherwise. The Socialists evolved in a weird way. The Socialist Prime Minister Sergei Stanishev, who is now the chairman of the European Socialists, introduced the flat tax in Bulgaria, something that two right-wing governments didn’t dare to do. This party, in other words, was protecting the interests of big capital. One third of the members of the BSP Executive Board, the leaders, are millionaires!

One of our mistakes during the transition was that we did not consider setting up a Labor Party. Until the mid-1990s, we identified ourselves with the party of the right wing, the Union of Democratic Forces (UDF). But within this right-wing coalition was Petar Diertliev of the Social Democrats, the Agrarian Party, and the Green Party. It was a political mistake for the UDF not to have specified its identity. Initially, it filled the whole political spectrum. It shouldn’t have identified itself as the right wing, leaving the whole left to the former communist party.


But you were in a common predicament. The former Communist Party in Poland instituted austerity communism. And Solidarity initially supported shock therapy. You may have made a political mistake, but it was not a unique political mistake.


I’m not a believer in global conspiracy theories. I don’t think anyone predetermined that these mistakes would happen. Perhaps this was just the logic of development.


Is it too late to establish a Labor Party?


Sooner or later it will spring up. But our members believe that this isn’t our business. They do not trust politicians, regardless of their party. It’s not just our members. This mistrust has resulted in a tsar being elected prime minster, which was basically a rejection of political parties. Later, after the unsuccessful mandate of the BSP, this mistrust in parties resulted in the current prime minster coming to power. He set up a party five minutes before the elections, just because he needed it for the registration. Basically, a person who doesn’t respect any parties won the elections. But this can’t go on. If voters are not swayed by extremists, such a party will eventually come into being. And then it will be natural for the two trade unions to support it. But if we invest efforts in political activities, people will not trust us.

I remember at the beginning of the transition here, Jim Baker of the AFL-CIO came to Bulgaria. He told us off the record that political democracy is beautiful but it ends at the threshold of private companies. We had no idea what private property meant back then. We had so much to do in the field of industrial democracy. We are still not on equal footing with employers. They have their own powerful representatives. Many years ago, you and I talked about the trade union lobby in parliament. Now almost all MPs belong to the lobby of capital.


When populist parties here, like Ataka, talk about economic issues, they sound left wing in their criticism of big capital and globalization.


This is why I said that if they don’t shift to extremes, people would support a Labor Party. But poverty is the problem. When the poor are marginalized, they become the social base for both right-wing and left-wing extremists, including nationalists. It’s easier to put the blame on the Gypsies, on the Jews — on the Martians, if you like! — rather than admit that you must take your life into your own hands.


Podkrepa now cooperates quite well with the former official trade union CITUB.


For 10 years now. In general, we do not have different paths though we have two different headquarters. But we do compete as rivals within enterprises. We compete for workers: who will offer more, who will do more. Usually, our demands are stronger. Maybe they are better negotiators; maybe we are better in action. For instance, during the railway strike of a year ago, their leaders were more in the front. But 75 percent of the strikers were ours. They waved the flags.

But there are two trade unions in Bulgaria, that’s a fact. They are the larger trade union. The time when Podkrepa was growing is over. We made the same mistake as Solidarity. We participated in governments. I was the head of the national employment service for four years: at the time when the unemployment rate ranged around 18-19 percent. This led to shrinking membership. And the repressions at the enterprise level pushed a lot of people away.

We do not have the financial resources that CITUB has. I’m the head of the Institute for Social and Economic Trade Union Research here at Podkrepa. Our institute doesn’t have permanent staff. It works ad hoc. The mirror institute of CITUB, meanwhile, has 15-16 staff. Nevertheless we are rivals. Our people keep working because of an idea. They do this for minimum pay. They work elsewhere and come here to support Podkrepa. I suppose that this is what holds us together: the idea.

At the same time, we developed a network of service not only for our members but for all workers. We provide legal counseling free of charge as well as assistance on labor market and assistance for professional retraining, We’ve finally been able to grow our youth network. This is very important because the workforce is aging in Bulgaria. The young people entering the labor market are more individualistic. They don’t care about trade unions. And the fact that this youth network is developing is very satisfying.


Have you had second thoughts about your four years as the head of the national employment office?


Yes. After the economic crisis of 1996-97, the situation here was terrible. The closing of workplaces was accompanied by hyperinflation: this was a huge challenge. The right-wing expert government of Stefan Sofiyansky and the right-wing government that followed of Ivan Kostov invited two trade unionists to serve: the minister of labor Ivan Neykov from CITUB and I was from Podkrepa. The national employment office at the time was not a government agency. It was a public employment agency. It had a tripartite governance. We had advisors from the U.S. Department of Labor and support from USAID for institution-building and capacity building. And I think that this reform was good. Personally, it was difficult. I had to work 10-12 hours a day. Everybody did.

At that time, we introduced labor-market policies that exist everywhere but were new for Bulgaria. And I think with scarce funding we managed to stabilize the situation. We also managed to preserve the social peace or, at least, we prevented the unemployment rate from exploding.

I now hold an expert position at Podkrepa. I provide expertise to the leaders of Podkrepa particularly on the issue of labor markets. And I represent Podkrepa in the national council for employment.


Does Bulgaria have a social safety net that is sufficient, comparable to safety nets in the region? And has the EU been helpful on this?


My reply to this is in the form of a question. Is there a European social model? Is there a social Europe?

We have the poor South and the rich North here in Europe. The difference between our standard of living and the European standard of living is huge. But there is also the difference between Spain and Portugal on the one hand and Netherlands and Sweden on the other. I’m talking here not about the phenomenon of migration but internal European mobility whereby a qualified labor force from Spain, Portugal, and Italy goes northward and we Bulgarians take their places. They engage in social dumping in the north, and we do the same in their countries. It’s quite doubtful, of course, that the Spanish will ever receive Swedish pensions or that our workers will receive Spanish pensions.

The institutions of a social safety net are there. They are more or less working. The problem, however, boils down to people’s incomes, because contribution rates are dependent on income. We have a 10 percent flat tax rate here in Bulgaria, which is unique in Europe. If I get $1000 dollars, I pay $100. Bulgarian pension system faces two problems. The first is stability. It depends on the income. The second is adequacy. Pensions fail to replace income, regardless of the European level. Health insurance fails to cover adequate services. The current government is very much concerned about stability and security, but they don’t care about adequacy.

I can give you an example. Every worker pays health and pension insurance contribution. The military, police, and civil servants, however, do not pay: the government transfers their contributions to the insurance system out of the taxes of the same employees. I’m not going to refer to this as honest and fair. It’s illogical! I said my score was 4 for the social sector. Because the institutions are in place and largely corruption-free. The sector isn’t corrupt because it doesn’t generate profits. It operates at a deficit.

My forecast for the future, however, is not very positive. Employment remains low. In its 2020 Strategy, the government set as a goal an employment coefficient of 75-76. This is the proportion of the workforce that has a job. The Europe-wide coefficient is 72. The Bulgarian government’s goal is too ambitious. Right now we are  about 50!  Maybe they are expecting that the next government or the government after that will achieve this goal. Brussels requires many papers to be submitted: a national strategy on this, a national program on that. We are excellent at delivering these papers. But this particular one is really a non-paper.

One policy the government takes pride in is the retention of young people. Emigration has dropped. But this is because the jobs in Europe have decreased. Our efforts should not be to convince people to stay rather than emigrate but to convince the government and the employers to increase remuneration. The average productivity of labor in Bulgaria is 43 percent of the European average and the average income is 30 percent below the average. For over 10 years, remuneration has been lagging behind productivity. In the last couple years it has gone slightly ahead of productivity. But there’s a lot to do. Our job is to fight employers at the negotiation table. Our job is to be the red light in society and to tell capital that, when there’s a crisis, it’s better to negotiate with us in order to avoid social explosions. However, the appetite of capital is insatiable.

You see what happened in Europe. When the Berlin Wall was still in place, Europe was a symbol for us: something to look up to, a colorful shop window. Workers from France and Germany came here on holidays, with loads of money. Back home they had lots of rights. They had strong trade unions. They were highly respected. That showed the advantages of capitalism. After the Berlin Wall fell, we witnessed, I won’t call it exploitation, but the intensification of labor. In the years after the Berlin Wall fell, especially lately, Western Europe was shaken by protests and strikes that it had not seen since the 1960s. It’s still going on. This is why Cyprus elected a communist president and Greece all but did as well.


Where do you think there is the greatest potential for growth in trade union membership? Are there barriers to organizing new members imposed by the government or by international circumstances? We have for instance Right to Work laws in the United States.


Something similar is attempted in Bulgaria in terms of an effort to limit collective bargaining. The Civil Service Act deprived civil servants of the right to become members of trade unions. Traditionally, trade unions were very strong in this sector. Now they have no right to collective bargaining. They have no right to strike. We lost a lot here. If this law is not amended, we won’t be able to organize in this sector.

As for prospects, that’s where the greatest obstacles lie, for instance in the banking sector. There’s not a single bank with a trade union. In the high-tech sector also there are many challenges. At the beginning of this year, we set up a chapter in a mobile operator called M-Tel (Mobitel). Young people were working there, average age of 25, with good education and language proficiency. They are confident that they are working at a good company, and they receive handsome salaries. When hired by a bank or a high-tech firm, new employees sign declaration that they voluntarily don’t want to be part of a trade union. This refusal of labor rights has no significance. But the human resources managers often refer to this declaration.

In any case, four times we tried to set up an organization within M-Tel. And four times they fired the initiators. Two years ago, the fired employees won their case in court and were restored to work. M-Tel said that it was cheaper to pay out 100,000 Euro in judicial costs and compensation rather than allow a trade union in the company. The owner was a Russian mafia guy, Mikhail Cherny, who was subsequently ousted from the firm. But we suspect that he continues to be in charge through an offshore company.

This last time, we worked underground for 6 months at M-Tel until we had 250 people. And only then did we announce the existence of the union. The managers couldn’t deal with that. But the first union was set up in the call center and in the headquarters, where they do technical support for software. It those workers were dismissed, the company would collapse. Even if they go on strike, it will be detrimental to the company. So, there is potential. It’s a matter of strategy.

One of our big allies is the anti-trade union policy. Currently, we have temporary work agencies. The companies dismiss people that have permanent contracts and hire people from these agencies at half-salaries. The notorious EU directive on Flexibility and Security in the Labor Market is all about the growth of temporary agencies, part-time workers, distance workers, and so on. In Bulgaria, this means flexibility for workers — they must be very mobile, be willing to work flexible hours — and security is only for capital.

The response to this is to make people organize. I’m observing this organizing within M-Tel. They have developed their own tactics. They are scattered around the country. They communicate by Internet. They set up meetings over the Net. New members are admitted online. This has never been done here before. One of the tasks of our institute is to observe this tactic and see the results and propose it for organizing at other companies.


The EU once represented something positive, not just for Bulgarians, but in terms of harmonizing up social welfare standards, labor standards. But more recently it seems that the EU is driven more by banks and finance. Flexibility is definitely part of that. But do you see a possibility of EU institutions strengthening trade unions or leading to the overall improvement of working conditions and compensation?


Yes. The problems that Europe faces are not unique to Europe. They are part of globalization. Workplaces were shifted to China, not only from Europe but from the United States as well. The knowledge-based economy was deployed on such a minor scale that it never was able to create new jobs to replace industrial employment.

The response to globalization is a mirror image. Trade unions have responded by unifying on a large scale. Six European trade unions in metallurgy, transportation and mines became one big union. All public sector unions – teachers and so on — united into the European Public Service Union. This response gives us more possibilities.

When we organized a strike at a Turkish company in the Bulgarian city of Targovishte, which privatized a glass factory, it was a 60-day strike. We were supported by the Turkish trade union, because they had 7,000 members in that sector, as well as the European glass factory trade union members.


Has there been cooperation among trade unions within Eastern Europe?


Yes. Interestingly, the former relations are preserved. For instance, Podkrepa maintains close relations with Solidarity. CITUB is closer to OPZZ. There is some sentimental value to these relationships. So, certain strong relations were established in the past, and they are still in place. However, some of the trade unions that we partnered with in the past are no longer influential, like Liga in Hungary, which is very very small, or Fratia in Romania.


Are there joint projects? Around organizing in companies that have enterprises in both countries?


Yes, and we use European money for joint projects and cross-border programs. It’s always best to have a Western partner so that there’s a transfer in knowhow and innovation. Some time ago, I visited Barcelona. With a trade union in Catalonia and with Polish partners, we introduced knowhow for career counseling. Up to now this service was not offered by unions in Bulgaria. We trained 70 people who will be offering this service all over the country.

This knowhow didn’t exist in Spain, Poland, or Bulgaria. The transfer of this knowhow originated in Austria. This was not a major project in terms of funding. The training, localization of materials, and translation came out to 60,000 Euro — 20,000 Euro per country – and it lasted a year. It’s a wonderful project because it provides people with a free service that would otherwise be very expensive on the market.


Do you see any prospects of “wild capitalism” being any less wild in the future?


No. It hasn’t become milder. Perhaps only a little bit more civilized. What can stop capitalism from becoming wilder is the recognition that greed may lead to social explosion. There’s the example of Greece. You don’t think that the deficit resulted from the fact that the Greek workers and pensioners simply ate this money. Money was wasted, and the budget crisis is the result of the actions of politicians and big capital. But the price will be paid by the workers and pensioners. And when they can’t pay, they go onto the street and you see what is happening there. This won’t threaten European institutions. But it can serve as a very bad example.

I saw two rallies in Barcelona in two days. One was for the independence of Catalonia. And the second was against the austerity measures. Both of these rallies were very strong. And there were Greek flags waving there.

So, there are areas in which we perform well and we can give a high score. No matter how unproductive our elections might be, we have political freedom. The right to choose is amazing. We also have the right to travel, the right to information.

I have contact with our colleagues in Russia and Ukraine. When I tell my son that they restrict the Internet over there, I think that he’s happy that he lives in Bulgaria rather than in Russia or Ukraine.


When you look back to 1989 and what has changed or not changed since then, how would you evaluate the situation in Bulgaria over that time, with 1 being most dissatisfied and 10 being most satisfied?


4. Because 40 percent of things are done.


The same period of time and the same spectrum, how do you feel about your own personal life?




Looking into the near future, how do you feel about the prospects for Bulgaria over the next few years?




Sofia, October 2, 2012

Interpreter: Vihra Gancheva

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