Serbia: The Death of the Zastava auto plant

Zastava is no more. After twenty years of agonizing transition from a centrally planned “self-management” economy to capitalism, the factory, which once stood as the symbol of post World War Two prosperity and development in the former Yugoslavia, is about to be erased from the state registry of companies, giving way to an Italian multinational FIAT.

At its height in the late 1980s, Crvena Zastava (Red Flag), as it was then called, employed some 35,000 workers producing over 230,000 cars per year, with another 130,000 people employed by various component makers all over Yugoslavia. However, the two decades of civil wars, international sanctions and privatizations left the factory in shatters.

In 2001, after the overthrow of the regime of Slobodan Milosevic led to the speeding up of the transformation of the economy, more than six thousand workers were erased from the employment lists in one single day. In the process, the once prosperous industrial centre of Kragujevac and its hinterland became known in Serbia as “the valley of hunger”.

On its arrival, FIAT split the remaining Zastava workforce in half, through dubious testing procedures, employing only one thousand workers. The defeat of one and a half thousand Zastava employees, not taken on by FIAT, who went on strike in the last days of December 2010, insisting on the right to work, marked the final blow in the transition from a former industrial giant.

Faced with the perspective of collective sacking after being labelled redundant, the workers braced themselves for a fight, demanding the maintenance of their work contracts, new training programmes and the right to return to work as soon as the new company expanded production. The government instead offered their transfer to the status of unemployed workers along with a social programme consisting of redundancy payments of 300 Euros per year of employment, social help of roughly 200 Euros per month in the course of the next two years and government sponsored training programmes which would allegedly prepare the workers for the demands of the modern market.

The government adopted a tough stance, heating up a decades long anti labour rhetoric which combines neo-liberal insistence on individualism with the labelling of the Zastava workers as the lazy and privileged section of the working class, enjoying the benefits of social security against the one million other unemployed citizens left to fend for themselves. The Economic Ministry advisor Aleksandar Ljubi? made the following statement which reflects the dominant public discourse in Serbia today when it comes to workers’ rights:

“...The state is not here to employ people. The job of the state is to create conditions in order for them to find jobs. It is upon each of them [the laid-off workers] to struggle, in accordance with their interests and efforts, for the best possible starting position in the labour market and the best possible employment.”

The trade union announced fierce resistance and a blockade of the city should the government persist in its intentions. On 29th December, the mass meeting of Zastava workers finally turned down the government offer and decided to radicalize the struggle by starting a hunger strike inside the Kragujevac city hall. That very evening the first group of around one hundred workers started entering the City Hall in an organized manner, bringing in the beds and supplies prepared beforehand, which indicated a resolve for a prolonged fight and a readiness to celebrate New Year’s Eve inside the occupied City Hall.

The next day, however, the media broadcast a uniform news item which stated that the workers had accepted the slightly changed government social security programme and had peacefully left the town hall. The short news item was not followed by any reaction or statement from the workers or the trade union leader Zoran Mihajlovi? who, the media reported, had been transferred to a nearby hospital after suffering a heart attack during the night.

Without entering into speculation imposed by the media blockade over the circumstances in which the trade union finally agreed to end the blockade and sign the social security programme, we can still point to several important factors that have contributed to this defeat.

First of all, the workers were not only divided between the ones who were taken on by FIAT and the rest who got left behind in the old company. On top of this, among the one and a half thousand workers that remained on the Zastava books there were some four-hundred who were eligible to apply for the government scheme which would allow them to override the few years of employment needed to get their pension.

Secondly, behind the mass public meetings and seemingly radical acts it was clear that the trade union had no clear tactic of how to carry out a prolonged strike. The above quoted government advisor revealed a potential weak point of the government when he expressed hope that the announced protests would not endanger production and the current reconstruction of the new FIAT factory building.

The trade unions failed to involve their former colleagues in solidarity action on any level. It would have probably been quite hard to engage the thousand newly employed FIAT workers   who face an army of unemployed inside Serbia   in some kind of more concrete action. Nevertheless, the trade union could have worked on connecting various other factories in a similar position and turned Zastava into a highly visible national rallying point for the defence of workers’ dignity. Furthermore, the trade union leadership proved to be completely impotent in challenging the aggressive pro-market propaganda and the dirty public slander campaign against the workers. The sole argument the trade union had put forward as the reason why the workers should remain employed is that the current government had given them their word that nobody would be sacked when FIAT came to Kragujevac.

Thirdly, the fact that the workers chose to occupy the City Hall and not the factory premises reveals perhaps the most fundamental obstacle standing in the way of a renewal of a working class offensive in Serbia today. The parasitic nature of this “transitional capitalism” has meant that the productive infrastructure has been left idle for almost two decades now. Without the power of production in their hands, the workers feel they have no levers with which to enter the struggle with the bosses and force them to listen to their demands. Without control over the machines, the Zastava workers, like so many in Serbia at the present moment, could only turn to their own bodies and tactics such as hunger strikes or self-mutilation as a means of making the government and the media pay attention to their grievances.

As much as the old Zastava factory stood as the symbol of the achievements of planned economy under Josip Broz Tito, the new FIAT reminds the population of the failed promises of the newly established market economy. The Democratic Party and its leader Boris Tadi? won the parliamentary and the presidential election in 2008 in large part thanks to the arrival of FIAT, Both of these elections further strengthened the orientation of Serbia toward the European Union. This investment plan was seen as the final proof that the liberal economic policies and sacrifices of the ordinary people during “transition” are finally giving results by attracting big foreign investors capable of renewing the economy and opening new workplaces.

The concessions given by the Serbian government to attract this multinational company are unprecedented. FIAT received monopoly status within the market, subsidies of ten thousand Euros per employed worker, subsidies for sales in the internal market in the first year, exemption from taxes for the next ten years, government provided land around Kragujevac for the company’s foreign component makers and a duty-free industrial zone equipped with all the necessary infrastructure. All of this comes from the same economic experts who have been convincing the Serbian public for years that state companies are not worth keeping as they require state subsidies which the country cannot afford!

In turn, FIAT promised to hire two and a half thousand workers with no clear production commitments and a two hundred million Euro initial investment. Three years after FIAT’s arrival, the government has repeated it is awaiting some eight hundred thousand additional Euros of investment from its foreign partner, ten thousand new work places in the car industry based on the mass production and export of two new car models. The latest estimates given by the government are that FIAT will produce around three hundred thousand cars in Serbia by 2013.

So far, FIAT has not even met half of its initial commitment to pay the founding capital of two hundred million dollars due in 2008! Last year the factory produced little over fourteen thousand cars out of the thirty thousand planned. On top of this, the company recently announced that one single Serbian company made it to the list of FIAT’s official component makers. The FIAT Corporation therefore received the infrastructure, complete market and all financial subsidies the Serbian state could offer in return for an investment of one hundred million Euros, a production output not a great deal bigger than the one Zastava had before privatization and a bag full of empty promises. This is the kind of business deal an American company would expect to reach in Iraq after the occupation. If one is reminded of the fact that much of Zastava’s production facilities were bombed by NATO in 1999, this comparison does not seem so farfetched as it might appear at first.

It is clear that this is no partnership relation. FIAT keeps playing with its investment plans and car model allocations on a monthly basis, while the Serbian government has no influence over the decisions whatsoever. In the case of domestic capitalists, President Boris Tadi? could have at least made an appeal to their “patriotic duty” in trying to make them pay taxes and invest in Serbia. With FIAT the government cannot do even that. The truth is that Serbia is just another piece of the puzzle in the global game of blackmail that FIAT is playing. With production facilities in Italy, Brazil, Poland, Serbia and the newly acquired plants in the United States, the multinational is reaping benefits from “business friendly” governments and blackmailing the workforce of single factories into submission through threats of plant relocation.

For the time being the workers in Kragujevac have been forced to accept the humiliation of themselves, their colleagues and neighbours thrown out on the street. Each time the workers in one FIAT factory are defeated their colleagues in other countries are soon forced to accept the lowering of standards as well. The promised investment in Serbia was used by the Italian media in preparation of the atmosphere which was supposed to scare the workforce of the Turin Mirafiori plant into accepting the severe new work conditions. Despite the scare tactics, the referendum inside the Turin factory allowed the introduction of the new work regime by only slim majority in favour of the company plan. As a response to the attacks, the FIOM metal-workers’ trade union called for a general strike inside Italy.

The workers’ solidarity and coordination across borders is the only way to counter the bosses’ offensive. The struggles of Italian workers and the recent exchange of solidarity letters between the trade unionists in Serbia and Italy show the way forward. In the best tradition of the labour movement, the solidarity declarations from workers in different countries have been read from the speakers in different Italian cities as a part of the metal workers’ strike. It is up to us not to allow solidarity appeals to be turned into an empty ritual. The fate of Zastava stands as a warning of what might happen to each factory which goes along with FIAT’s deadly tactics without strong resistance and a developed solidarity front.

  • An injury to one is an injury to all!
  • For a joint meeting of trade union representatives from different FIAT factories in Europe as a first step toward international solidarity!