Saturday, January 17, 2009

everyday people are saying enough is enough

Since I've been back in the Czech Republic, I have noticed a certain degree of a pro-business, anti-union and anti-socialized anything slant in mainstream media.

The most recent example of this was the Prague public transportation employee strike, which was supposed to happen sometime this month. It was, however averted last week after the transportation union leaders succeeded in forcing the Minister of Finance to take the proposed tax and salary law changes off the table until a new proposal is written up and consulted with the union leadership.

Based on the press coverage of the looming strike, one could walk away with the impression that the bus and train drivers are a whole bunch of whiners, willing to bring the country to a halt because of a few puny perks like stravenky, or meal discount vouchers, a popular benefit many Czech workers receive from their employers. The reason for the strike was most often explained in the press as a change in tax law, slated to take effect in 2010, which would transform benefits such as discounted bus passes and meal vouchers into a lump sum cash contribution, thus reclassifying these perks as taxable income.

According to Sodexo, the leading whole sale vendor of meal vouchers, "89% of private companies and 94% of state institutes have been providing their employees with meal voucher benefits."

To explain, meal vouchers are purchased by companies from enterprises (such as Sodexo) specializing in this arena, then resold to employees. The employer covers half the cost of the meal voucher value, which s/he can then deduct for tax purposes. The employee covers the other half of the cost, an expense which is tax-exempt unlike a cash substitute would be. Thus, many benefit: the employer gets a tax break and a good feeling that the employees are well taken care of, employees get meal discounts, restaurants and supermarkets get business.

The problem was not only the slashing of employee benefits that could ensue, but also the freezing of contract-specified salary increases for the transportation department employees. The city, which spends approximately half of its budget on Prague public transportation, also wanted to cut some transportation services and increase fares, which it had done a year ago as well. All this because the city's public transportation budget has been shrinking. This year, the city transportation department will be allotted about a quarter less than in previous years.

The public transportation unions were up in arms with the Ministry of Finance about these proposed changes. As the vice president of the Railway Union, Petr Bazger, says, they're calling for a strike not so much because of the monetary issue, but out of principle.

This is key. I would argue that much of what is happening on the labor front in the Czech Republic today has its roots in the economic reforms of the early 1990s. It was in September 1990, only ten months after the fall of communism, that the Czechoslovak Federal Assembly approved the "Scenario of the Economic Reform," the blueprint for trade liberalization and a massive-privatization scheme of state-owned enterprises.

At the time of the vote, 97% of businesses were state-owned, the highest percentage of any Warsaw Pact country. Today, nearly twenty years later, 86% of all the state-owned enterprises have been privatized. Free trade enthusiasts laud the Czech Republic for making fine progress, though the more radical Friedmanite types would have preferred a more rapid process.

The government is trying to shake off as many expenditures as it can, as quickly as possible, while playing into the hands of (largely foreign-owned) big business, in the form of outsourcing, tax breaks, etc. The Czech government is now focusing on the last and most guarded and controversial aspects of privatization: health care, education, worker benefits and protections, and social services.

Is the press connecting the dots between what the working people are fighting for and the effects on them of the priorities of those at the top? Not so much. Let me demonstrate. It was just announced last month that the Prague Transportation Enterprise (Dopravni podnik hlavniho mesta Prahy, or DDP) has signed a contract with the German-owned companySiemens for maintenance and servicing of one of the three subway lines in Prague, thus freeing a portion of the city-run enterprise from some of its "financial constraints." Supposedly the contracts of the 120 DDP employees Siemens will be taking under its wing will remain the same. However, most unions were opposed to the deal and future outsourcing deals in the works because it paves the way for the tunneling and selling-out of a publicly-owned enterprise. Only days after the contract with Siemens was signed, it was announced that the very same subway line (and others) will reduce frequency and shorten the routes. The government cites cost-saving needs as the reasons for its service cuts and for outsourcing.

It seems to me that the Czechs are getting fed up with the gutting of labor rights and state social supports. Many are saying enough is enough. Last fall, in every district in the country a left-wing party, the Czech Social Democratic Party (ČSSD), won majority seats in the local and Senate elections, thus upsetting the majority rule of the right-wing Civic Democratic Party (ODS). The ČSSD party's base has traditionally been the working-class voters in industrial towns.

Privatization efforts in health care seemed to be the straw that broke the camel's back. A year ago, in January 2008, patient fees were instituted by law for visits to the doctor. This decision created vast opposition. Many, including the ČSSD party leadership, argued it was unconstitutional because the Czech constitution guarantees free health care to "citizens have on the basis of public insurance the right to free medical care and free medical aids under the conditions defined by the law." Despite the opposition, in May, the Constitutional Court upheld the unpopular health fees.

So the voters spoke up. ČSSD promised to eliminate the patient fees and won the election by a landslide. Their victory was in the press frequently attributed to the people's dismay at having to pay fees at the doctor on top of the insurance costs they accrue. However, I believe there is a deeper cause. The Czechs seem to be saying: "No more. We did not sign up for this gutting out of all the state-guaranteed securities and protections. Profit before people is not what we want."

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