Who needs the enterprise?
Borovo 1988-1991

Capitalism on its way

The 1980s in the SFRY, a period of stagnation and economic crisis, represent a definitive shift from trying to devise a very own form of socialism towards market economy. The opening up to the market was widely conditioned by the demands of the International Monetary Fund. Since 1982, the federal government of SFRY has been signing a series of stand-by arrangements with the IMF, implementing austerity measures and structural reforms (Bilandžić, 1985: 486). The measures taken by Ante Marković’s government curbed inflation in 1990, but at a price of waves of bankruptcies and rising unemployment. Already in the first six months of 1990, industrial production in Yugoslavia fell by 11%, while purchasing power decreased by 41% (World Bank viii). Mass mobilizations of workers in the second half of the 1980s, including the Borovo strike, were directed against austerity measures, but did not succeed in stopping these processes. Moreover, pro-market reforms are imposed on workers as the only possible way out of the economic crisis and a manner of solving their problems.

Apart from the rise of nationalist politics, this period is marked by the omnipresence of 'market' rhetoric, which unites supposedly irreconcilable positions of the republican and federal elites. The proposed solutions to all problems are personal responsibility, entrepreneurship, competition, rewarding effort as opposed to idleness, and increased discipline. At the same time, through political activity, particularly through state institutions, new, capitalist social relations are established. The new course of social development is reflected in legislative changes, which are directed towards abolishing self-management, the privatization of social property and reducing workers' rights; hence, towards radical transformation and destruction of the very foundation of Yugoslav socialism. Although shadowed by the war, the arrival of capitalism to Yugoslavia and Croatia at the time of blazing nationalist politics was very much registered in the sphere of work.

In Borovo, the transition to market relations meant that the Combine ceased to exist as a coherent whole. With the implementation of the Law on enterprises, the Combine is split up into enterprises governed explicitly by market relations.[1] The property of Borovo is also divided, causing new disagreements. For example, Borovo Commerce (Sales), with 14.8 % of employees, gets the largest share of the property (56.5 %). This causes dissatisfaction because of the prevailing opinion that the property of the Combine has been created by the workers of all enterprises together. The commonly created conglomerate “slowly erases all traces of its genesis” now.[2] The Combine's existing internal debt is split up between individual enterprises[3], frequently resulting in frozen accounts, delays in production, and furloughs caused by lack of work. Borovo enterprises are forced to adapt to the new reality. The Workers' Hall, the centre for social, educational and cultural activities, rents out its space for commercial purposes, with the excuse that „there is no such thing as a free lunch“[4] The Investment Development (Borovo’s construction department) requests from the other enterprises to either buy the flats in which workers already live, or for the workers to move out, and flats to be sold. The Factory newspaper writes: “novelty is...the nature of the commodity at the centre of the dispute: the roof over one's head!”[5]

In any case, the problems of Borovo, which, according to the Factory paper, include “redundancy, low productivity, and extremely high benefits“ were old news.[6] However, they also show that the socialist enterprise was not exclusively market-oriented. Besides having a wider array of social benefits which ensured its workers a relatively high living standard (even if their wages were lower than the republican standard), Borovo often took care of the unemployed, hiring people who would have otherwise become 'a social problem,' as often mentioned in our interviews.

Reducing relations within the Combine strictly to the market imperative deepens the already existing divisions between the workers. Ever more frequent quarrels about coefficients testify to the fact. Since the production workers’ income depends on productivity, it is not unusual for a semi-skilled worker to get a better premium than an expert. Workers unable to increase their income because of a cut in production demand that the same market policy be implemented on experts. In the Factory newspaper, criticism of “socialist wage-levelling“ is substituted by diagnoses of the birth of the market: “The question of income is a booby trap … a very distinctive trend is emerging. The trend of inequality. Disparity. Survival of the fittest. Sometimes even of the better … But it is what we want, right? Capital relations.”[7]

A crucial but problematic mechanism for dealing with redundancy is bankruptcy. In summer 1990, Sindikalna javnost writes about “the abuse of bankruptcy proceedings as a means of 'dealing with' the surplus of employees,“  adding that it is quite easy to fabricate necessary legal conditions for bankruptcy. If the enterprise is insolvent for 60 days, e.g. by means of an agreement between the executive management and the partner, the enterprise is unrealistically devalued.[8] Besides, dealing with redundancy at a time when workers are still holders of social property – soon to be converted into private - was quite problematic: “nobody wants to fire people,” says one of Borovo managing directors, “especially because of the fact that property relations aren't settled, meaning that the factory is still owned by all its workers”.[9]

The exact number of bankruptcies and the consequent unemployment is very hard to determine for this period due to the lack of systematized data.[10] According to the Republican Employment Office, the number of registered workers grew from less than 4,000 in January 1990 to 30,710 in December 1991 as the result of enterprises shutting down. Only in January 1991, additional 5,456 workers lost their jobs due to bankruptcy.[11] The number of the unemployed increased by 50,000 from December 1989 to December 1990, and by 80,000 until the summer of 1991.[12] Workers are told that they can increase their employability if they specialize, or develop additional skills such as computer literacy or speaking foreign languages.[13] However, even highly skilled Borovo experts, who were considered competent enough to start private businesses, have difficulties in finding their place in the market. Their problem is - the lack of seed capital.[14]

In March 1991, Borovo enterprises go bankrupt. After months of furloughs, strikes and instability, workers receive their employment records, and only a small number of people can expect to go back to work.[15] Rigorous discipline is established in factories under receivership. At the Machines Factory, there is an eightfold increase in productivity, but only at the expense of a heavy work increase, described by the Factory paper as: “the western productivity rhythm“. People still work for a minimum wage. Although disciplinary measures (e.g. for moonlighting) grew even stricter, “one must persist, because if you lose your job there's no social benefits, and no recommendation for further employment”[16] One receiver justifies the new discipline by claiming that bankruptcy is not “to be feared“, because it is “a real chance for the workers and leaders to dedicate themselves to the job.” He thinks that the workers have had enough of “self-management, their rights, sick leaves and fake solidarity. They want a job, someone who will give them orders and wages.“[17] Despite the claims that this will have a positive effect on the “workers whose creativity was suppressed,” fourteen workers were soon fired because they did not meet the demands or because they were “disinterested.”[18]

Bibliography:

Bilandžić, Dušan. 1985. Historija Socijalističke Federativne Republike Jugoslavije: glavni procesi: 1918-1985. Školska knjiga, Zagreb.

Cvek, Sven, Ivčić, Snježana, Račić, Jasna. 2015. “Jugoslavensko radništvo u tranziciji: ‘Borovo’ 1989.” in Politička misao 52, (2),pp. 7-34.

Lowinger, Jake. 2009. Economic Reform and the “Double Movement” in Yugoslavia. Doktorska disertacija. Johns Hopkins University.

Radelić, Zdenko. 2006. Hrvatska u Jugoslaviji 1945.-1991.: od zajedništva do razlaza. Školska knjiga, Hrvatski institut za povijest, Zagreb.

World Bank. 1991. Yugoslavia – Industrial restructuring study: overview, issues and strategy for restructuring. World Bank Group, Washington, DC. http://documents.worldbank.org/curated/en/839571468304234506/Yugoslavia-Industrial-restructuring-study-overview-issues-and-strategy-for-restructuring