Warsaw on collision course with unions as it pushes coal rescue plan

By bne IntelliNews February 15, 2016

The Polish government’s plans for a successor company to ailing state coal miner Kompania Weglowa (KW) include cuts to headcount and wages, according to a strategy document that leaked to local media on February 15. Unions have already threatened strike action.

A leaked strategy document lays out plans to cut 12% of employees and slash wages by 17% over the next two years to bring down cost of production, reports Gazeta Wyborcza. The scheme appears to go against pledges made by the ruling Law and Justice (PiS) during its successful election campaign late last year to solve the problems of the industry without job losses.

The previous government’s efforts to restructure Poland's coal industry, which employs around 100,000, was ditched in January 2015 after the powerful mine unions protested. It was just the latest failure to turn around the country's ageing and inefficient mines. The situation is growing more urgent as weak European markets and cheap imports have losses mounting at KW.

The main idea of both the previous and current governments state-controlled companies is to have state-controlled companies, mostly from the power sector but possibly including others in energy and finance, help support the mines. However, the enthsiasm of potential investors is luke warm at best, and not helped by the unions continued opposition to any restructuring measures.

The wider plan assumes KW will be replaced by Polska Grupa Gornicza (PGG), in which investors would put money to ensure PGG is “financially self-sufficient” in two years, as the head of the company puts it. Negotiations with investors are under way officials claim. PGG will be built on the basis of a subsidiary of coal exporter Weglokoks. Investors will be Polish companies, including from from the financial sector, PiS has claimed.

However, the leaked strategy has already provoked the wrath of the unions, which report they will carry out meetings across the 14 KW mines on February 16.

KW executives reportedly drafted the plan for the cuts on January 27, as the effort to get state-controlled utilities and banks to buy into the rescue continues. A spokesman said KW would not comment on “fragmented information and speculation,” adding the figures are only “forecasts”.

Unions, however, minced no words. “We are never going to agree to such drastic cuts. January salaries were already lower … there might be strikes [soon],” the head of the Solidarity trade union in KW Boguslaw Hutek thundered.

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