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

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

3. RTB Bor – reform context
Mine operation a major drain on budget
Loss making, RTB Bor dependant on $30-$45 million per year in direct and indirect subsidies
Second largest recipient of direct state subsidies (2002 – 2004)
Clear need to restructure – through market test (privatization, sale to a strategic investor)
Social reactions to government proposal: Protest blocking highway to Athens (during August 2004 Olympics)
Good timing: price of copper has doubled in the last 2 years.
Open-pit mining complex with one underground mine, large smelter
In process of restructuring hundreds of state-owned enterprises
The mine, which is functioning at about 10% capacity
Failure to privatize would lead to bankruptcy and liquidation.

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

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

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

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

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

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

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

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

12. Findings

13. Findings Age group ≤ 35 36 - 55 ≥ 56 Continued education and training
≤ 35
≥ 56
Continued education and training
58.8
31.6
15.8
Self-employment support
43.6
35.8
40.4
Business center services
25.5
20.9
19.3
Job Seeking Clubs
21.6
18.9 14
Employment in Public Works
17.7
19.2
Support for finding employment outside of region
14.5
10.5
Business incubator
15.2
14.6
8.8
Subsidies to employers
14.2
12.9
Employment and rehabilitation of disabled persons
6.9
9.2
12.3

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

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

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

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