Renault’s Romanian Fairyland Suspended

The Bucharest press didn’t approve of the workers’ vote to strike at the Dacia car plant in March, nor its implications for industrial relations. “Doctor Union: the anti-investment cure” was the headline in the daily Jurnalul on  March 22; “Dacia and ArcelorMittal, strikes are at the limit of the law” was the headline in Cotidianul on  March 26; Evenimentul Zilei, the Ringier group daily, reckoned on March 27 that the strike at the Renault subsidiary could put up the Dacia Logan’s price by $78 to $125.

That reaction from Romanian journalists is symptomatic of a trauma still gripping the country following the dictatorship of Nicolae Ceausescu, and after the political manipulation of the miners’ strikes in 1990 and 1991. (Democratically elected but unable to stabilise the political situation after the fall of Nicolae Ceausescu, President Ion Iliescu approved the miners who, in June 1990, descended on Bucharest and ransacked the offices of local authorities and of opposition parties. In September 1991 Iliescu used a new march by the miners as an excuse to dispose of prime minister Petre Roman. Four died and over a hundred were injured in riots.)

During the transition years, the media described wage claims as a form of nostalgia for totalitarian communism, a pretext to treat activists as pariahs. Romania in transition was divided. Workers saw their jobs disappearing east via factory relocation; investors saw a land of gold where people worked happily for under $150 a month. But this economic and social scene has started to evolve. In the autumn of 2007, after weeks of negotiation, the unions concluded a deal with the neo-liberal prime minister, Calin Popescu-Tariceanu, to increase the monthly minimum wage from $167 to $214, despite monetarist criticism from President Trajan Basescu, the finance minister, the head of the national bank, and the press. And 2008 will be even more decisive for union action.

What changed was Romania’s accession on January 1,  2007 to the European Union. This, according to Petru Dandea, vice-president of Cartel Alfa, the union federation, created “price alignment around European market tariffs which worked through as steep rises in the cost of living. That’s what’s causing the current round of wage claims.” Just a few months after the minimum salary deal, strikes broke out at Dacia and ArcelorMittal. First they were criticized by all sides. The Atmosphere was tense.

The strike at the Dacia production line in Pitesti, home of the Logan, helps explain what happened. It had just begun when the plant’s management filed a complaint against the Union of Dacia Workers (UDW). On  April 9 a court at Arges judged the strike lawful, which didn’t prevent Renault’s group head of legal affairs taking advice on whether the decision breached Romanian law.

The unions still saw the court decision as an unexpected blessing. But then the strike at ArcelorMittal ((the Solidaritatea union called for a re-evaluation of salaries at the Galati plant even though almost 4,000 job losses had been announced by the factory management.)

 was suspended on April 15 after a decision by the court at Galati. Romanian law on the right to strike empowers individual judges: it stipulates that action “must not endanger people’s health or safety”. Factory managers hinted at industrial accident risks even when workers followed the correct safety procedures.

 “We can’t make precise accusations, but there is so much corruption within the Romanian justice system that it would hardly be surprising if a number of the orders suspending strike action were obtained in this way,” said Dandea. Romania’s accession to the EU had been threatened by a clause penalizing slowness in reform of the justice system, reactivated in the spring of 2007 after pressure from Brussels. The judgment of the Arges court, applauded by the unions, endorsed the whole trade union movement. Then, in an open letter to the workforce on  March 21, François Fourmont, Dacia’s chairman, warned employees that production of the Logan might, in the long term, be switched to Morocco or Ukraine.

Adrian Ursu, anchorman of a eurosceptical TV programme saw this threat “as a piece of bluff, or perhaps a gaffe, but in any case a badly judged initiative at a moment when the dispute might have been resolved”.

The workforce didn’t take the letter seriously. “It was ridiculous,” said Dandea. “Renault has invested over a billion euros in Romania and can’t leave just like that. Besides the write-down cost of the plant there would be heavy salary payoffs. Leaving Romania would prove far too expensive.”

Relocation is a credible threat for industry sectors like textiles, which rely on unskilled labor, but with Dacia it seems highly unlikely. Anyway, such a threat bonds otherwise disparate groups. Never in the history of Romanian labor struggles has a single union benefited in the way the UDW did from Fourmont’s letter: the post office union promised $17,160 to compensate for salary losses, the Universul federation came up with $3,440; in France CFDT-Renault collected almost $15,600 for the cause, while shop floor workers at Renault-Cléon collected more than $3,120. Cartel Alfa pledged solidarity, as did the federation of petroleum industry unions Petrom. Even the Social Democrats, whose ideology is extremely variable, as is their championship of privatisation and flirtation with the markets, pledged to support the movement, dragging the European Socialist Party in their wake.

A globalisation dream

In recent years Renault’s 1999 acquisition of Dacia has been described as a fairytale of globalisation. The story was of a major western industrial business arriving in Romania to bond with the workforce more closely than any local business had ever done.

Renault’s trouble-free reconstruction of Dacia was viewed as a textbook demonstration of management. This was partly the work of Bernard Brunhes Consultants, hired to manage the transition. The boast was that the unions had accepted a reduction in workforce from 27,000 to 16,000. Many commented that things had changed for the better since the arrival of the French.

The company’s human resources director, François Blanc, quoted Heraclitus: “Harmony is best born among those who differ”. Christian Estève, managing director at the time, congratulated himself for negotiating a start-up process phased over several years although Romanian law would have granted the necessary licences in two months. Among anticipated plus points were the establishment of a trust to nurture progress and mutual understanding, a staff retraining program and help with new businesses. Dacia wanted to be seen as a model privatisation of a former eastern bloc factory.

Success also brought exceptional commercial returns. Renault’s chairman, Carlos Ghosn, said this March that the operating margin on the Logan was the best throughout the group, 8 per cent  compared with an average 2 per cent. Fourmont announced record profits of $156m. Renault and Fourmont planned to increase production to 400,000 vehicles a year .

 But the workforce remembered  of unkept promises. Constantin Stroe, who had been the Romanian manager of Dacia since 1989 and stayed on after the Renault acquisition, had given assurances that under the new regime workers would earn a salary which met the needs of a family. By this year the workers were still waiting, while inflation rose because of oil and food prices.

To curb inflationary pressures industrialists and government emphasised a need for wage control, and this was echoed at the Ecofin (EU finance ministers) meeting in Ljubljana on  April 5. “It was unacceptable,” said Dandea. “Inflation is caused by factors which have nothing to do with the employees: the US financial crisis and the rising cost of food. I just don’t understand why Europe’s finance ministers seek to make workers pay for the bankers’ follies.” If, further west, “targeted” inflation has hit household finances, it has had a catastrophic impact on Romania. In 2007 the weekly food bill was 41 per cent  of the family budget , because, although the minimum salary in Romania is 10 times less than that in France, food often sells at much the same price.

The manager of a French business explains the wage claims as “a classic case of supply and demand”. Officially, Romania’s unemployment fell from 10.5 per cent in 2000 to 4.3 per cent in February 2008. The departure of two million Romanians to live abroad since 1990 has drained workforce reserves. In a market economy, the scarcer the commodity, the greater its value – and that applies in the workplace, to the pool of skilled labour for Ford, newly installed in Romania.

“We’ve yet to experience a wave of outward investment,” said journalist Adrian Ursu. “Nokia’s decision to swap the German town of Bochum for the Cluj-Napoca region, benefiting from the public grants available locally towards set-up costs, is much more representative of the Romanian situation than the Dacia strike.”

José Manuel Barroso, president of the European Commission, calls relocation from the heart of the EU a deadly disease, but that does not seem to reflect a strong European social policy. The columnist Ioana Lupea unusually enquired after the medium-term economic and social costs of Nokia’s possible eventual departure, which would provoke the same upsets in Cluj as in Bochum, where local people protested by destroying Nokia phones.

Some 85 of Dacia workers voted on April 9 to continue their strike, since they had been reinforced by the problems of relocation and the Arges court’s favourable judgment. They snubbed union leaders who thought acceptable the management offer of a further $128. On 10 April 5,000 people took to the streets of Pitesti and by 11 April the protest had secured an average increase of $154, 65% of the original demand. Work began next day.

Could the Dacia strike be a step forward in European social justice? We will know soon. European trades unions and leftwing parties will be monitoring conflicts for positive developments. On  May 6 there was a strike at the Leoni wiring factory, a Dacia supplier in Mioveni. On  May 9 workers at Silcotub, a subsidiary of the multinational Tenaris, struck at Zalau. On May 15 workers at ArcelorMittal Galati struck again after the legal cooling-off period ended. While the battle to save the factory at Gandrange (Lorraine) continues, will ArcelorMittal’s French and other EU workers support their Romanian colleagues and open the way for community-wide union negotiations.

Stephane Luçon is co-editor of the publication Working for EUR100, Seppia, Strasbourg, 2006. This article appears in the November edition of the excellent monthly Le Monde Diplomatique, whose English language edition can be found at This full text appears by agreement with Le Monde Diplomatique. CounterPunch  features one or two articles from LMD every month.

Translated by Robert Waterhouse


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