More on Labor and Employment in Tunisia

I’ve written previously about how Tunisian labor unrest is a key risk to Ennahdha (see here and here). Two stories today suggest that problem isn’t going away, with demonstrations in Sousse and the government admitting that there are too many public sector workers.

Tunisia Live reports today of a large demonstration in Tunisia’s second city, Sousse.

A demonstration in support of the General Union of Tunisian Workers (UGTT) was held today in Sousse, a city located in the central-eastern coast of Tunisia. Nearly a thousand protesters were holding up signs and chanting slogans in a massive show of solidarity with the union. The protesters directed their ire against the government and particularly Ennahdha – the dominant, Islamist party in the ruling tripartite coalition.

Today’s protest was in large part a reaction to Prime Minister Hamadi Jebali’s recent controversial remarks on last Saturday’s UGTT-led demonstrations condemning  a series of vandalistic acts against several of its offices.

Jebali stated earlier this week that “Ben Ali militias” – eager to see the new government fail – had infiltrated last week’s protests.  According to the Prime Minister, “businessmen” from Sousse and “Ben Ali militias” had coordinated their efforts and transported supporters by bus from the coast to Tunis in order to disrupt public order.

Meanwhile, Tunisie Numerique reports the Tunisian minister for administrative reform called for transparent recruitment into the civil service, while admitting that there are too many public sector workers.

Mohamed Abou,  Minister for Administrative Reform, said that the public sector can not absorb all the 750,000 unemployed Tunisians, underlining the government’s commitment that all competitive recruitment processes transparent and neutral.

…Mohamed Abou said that 580,000 public servants work in the public sector, a number greater needs of the Tunisian administration. He said that in the future promotions will no longer be more based on political party allegiance or nepotism, but according to a new system, primarily on a competitive basis.

The article goes on to talk (obliquely) about the corruption rackets common on Tunisian work sites:

Regarding the issue of workers’ sites, the Minister stressed that while 57 000 workers was the number provided to the Department, in 2010, the actual number does not exceed 16 000 workers.

Journalist Eileen Byrne “broke” the story of these worker sites last month in an excellent article in the Guardian.

Around 18,000 people are now estimated to be registered in chantiers across the Kasserine region. They are each paid about 250 dinars ($166) a month out of public funds. Corrupt foremen handing out the wages take upwards of 50 dinars ($33) off each person, local people confirm. If the worker stays at home, the foreman may skim as much as 100 dinars ($66) off the pay packet, and he also pads out the payroll with non-existent workers.

Government recognition of these problems is one thing, but amid growing labor unrest, they may prove difficult problems to solve.

Is Tunisia labor unrest a threat?

[Today’s article is a follow up to last week’s piece: Tunisia’s compact with labor is broken]

Tunisian labor unrest continues to tear at Tunisia’s new social compact with municipal workers staging a four day strike. This week’s strike, called by Tunisia’s largest union, the Union Generale de Travailleurs Tunisiens (UGTT), has already caused significant service disruptions for Tunisians. In particular, garbage collection has been suspended, leading to very messy (and stinky) streets.

This week’s events occur just days after a major disruption at one of Tunisia’s largest employers, Leoni, which shut down briefly over ongoing labor disruptions. Battle lines seem to have been drawn between the ruling party, Ennahdha, and the powerful Tunisian unions.

Tunisia Live reported yesterday  that UGTT offices had been targeted for vandalism, and one office was ransacked and burned in restive Kesserine. Tunisian blogger Mohammed Ali Charmi  reports: “The Echab (people) newspaper, voice of the UGTT, announced in its page in facebook that syndicalist militants arrested three militiaman who tried to attack UGTT office in Manouba in the west of the capital Tunis.”

Tunisia Live goes on to say that “Shems FM quoted Sami Tahri, a spokesperson for the UGTT, as saying “this is a political act, well organized by the Ennahda movement.”

While the retraction of inflammatory statements like Mr. Tahri’s seems to be commonplace in post-revolutionary Tunisia, his remarks point to a more open battle between labor and the new government. Ennahdha has frequently cited strikes and sit-ins as a principal reason for job losses since the revolution. According to Ennahdha spokeman, Samir Dilou:

les perturbations ont occasionné, depuis la révolution, des pertes de l’ordre de 2,5 milliards de dinars, ce qui aurait permis de créer 80 mille emplois.

translation:

[labor] disruptions since the revolution have caused losses in the range of 2.5 billion dinars ($1.66 billion USD), which would have allowed the creation of 80,000 jobs.

The party has two principal goals in bringing labor unrest under control. The first is their goal of kick-starting the economy through new investment, something which depends heavily on the stability of the labor market. The second goal is to show Tunisians that they are capable of governing. Had the Leoni factory ceased operations last week, it would have been a major blow to the former. The strike of municipal workers threatens the latter.

Charmi sees the threat of conflict between unionists and Ennahdha as an existential threat:

In absence of serious opposition to Nahda and his intention to include Islamic laws in the constitution, many Tunisians see the UGTT as an alternative opposition especially with its capacity to mobilize the Tunisian street. Note that UGTT played an important role the Ben Ali regime fall in January 14th after in successful general strike in different cities. It participated also a movement of protestation that pushed Mohamed Ghanouchi government to resign and lead to the constitutional elections that brought Nahda to power in Tunisia.

Tunisia’s secular elites have largely focused on issues that, while important, are not bread and butter issues (freedom of speech, women’s rights, censorship). Tunisia’s unions, however, have the ability to mobilize massive numbers of Tunisians. As of last year, the UGTT had a membership of over 500,000 workers, making it a formidable force in Tunisian politics.

While it has historically aligned with the ruling party (to the detriment of its workers), its statements this week show that it is showing its independence. And why not? Its membership demands it. A municipal garbage worker brings home 120 dinars per month (less than $80, or about $2.5 per day). Many workers are dismayed that the party that says it represents all Tunisians, especially the poorer class, seems to be ignoring substandard working conditions and pay.

Ennahdha has been the beneficiary so far of working class support. But as it is forced to take a stand on policy more and more, it risks alienating its constituencies. One can already see support for Ennahdha peeling off toward more conservative Islamist groups. It will need to tread carefully on the issue of workers rights – it may very well be its Achilles heal.

Tunisia’s compact with labor is broken

Mateur Tunisia is home to a small factory that typifies Tunisia’s industrial base. The plant in Mateur is one of three owned by the  German cable company Leoni, which has taken advantage of Tunisia’s low wages and relative stability to set up shop and employ up to 14,000 Tunisian workers. The plant produces components for fiber optic cables and is part of Leoni’s global supply chain.

Recently, however, an ongoing labor dispute between Leoni management and the UTT, Tunisia’s second largest trade union, threatened to close Leoni’s Mateur operation and throw 2,700 workers on to the streets. While negotiations have recently resumed, sparing the workers (for the moment), the precarity of the situation is indicative of wider unrest in the Tunisian labor market. It also represents the biggest risk to the current government.

While Tunisian unemployment and strikes have been well documented in the last year, little reporting has focused on the nature of the strikes and just what it means to Tunisian and multinational businesses operating in Tunisia.

Labor unrest was not unheard of under either Ben Ali or Bourguiba. In the 1950s, as Tunisia gained its independence, Habib Bourguiba relied on labor support. He later co-opted Tunisian syndicates, in an agreement that assured that the union had a place at the table, but in return unions bargained away worker rights. Ben Ali continued with this model, and while strikes, particularly in the mining sector, were periodic, there was never any regime-threatening labor unrest under the dictatorship.

Tunisian syndicalism took on a new form with the uprising in 2010/2011. Unions cast their support with the protesters – a key -ans often overlooked aspect to the uprising’s success. The subsequent period of transition from January 14 to the installation of a new government in December last year saw labor unrest increase dramatically. It seemed that any half-way organized union or guild went on strike. The airports, trains, utilities, and ministries all were affected by strikes. The police force, the enforcers of Ben Ali’s regime, were ironically some of the first to gain concessions from the government. Even workers in Tunis’s medina went on strike to protest the government’s feeble attempts to get tourists back in the souks.

While the government was in a position to acquiesce to demands from public sector (and state-owned enterprise) workers, private businesses were on their own to negotiate new contracts with their employees. While some firms were able to offer concessions to workers, a credit crunch from Tunisian banks and uncertainty in Europe narrowed the options for most businesses.

What was perhaps most critical was the “democratic” nature of the strikes. Many Tunisian workers went outside of their labor unions to protest employment practices. After a half-century of collaboration with the ancien regime, Tunisian workers felt that wages and benefits had been artificially kept low for too long. This represented a major change for business managers, who no longer knew with whom to negotiate.

The rules of the game shifted.

Some managers I’ve spoken to, who generally had good relations with their employees, were terrified that a rogue group could shut down their operations. They also believed that making concessions would not stop the problem, but only encourage more workers to use rogue strikes as a tool for negotiations.

It appears that this may have been the situation with Leoni, which stated, according to Tunisia Live, “this decision has been taken due to the impossibility of ensuring a normal continuation of operations at Mateur.”

Leoni is not the first foreign enterprise to consider ending operations in the country. Yazaki, a Japanese cable and wiring company, also ceased operations in southern Tunisia last year; negotiations are still underway this week between the Tunisian government and Yazaki to enable the return of normal operations.

Jeune Afrique reports that 170 foreign firms ended or partially ended operations in Tunisia last year. Tunisia experienced a 29 percent drop in foreign investment during the same period.

The social contract between capital and labor in Tunisia is broken. Tunisian unions feel the need to show their bona fides in the face of skeptical members, and managers do not feel that negotiations are being done in good faith. And the government has been reluctant to do anything about it.

As I’ve noted previously, Ennahdha has a generally neo-liberal economic worldview. They have promised greater globalization and are looking to further liberalize Tunisia’s economy. Some members of Ennahdha appear to hold extreme anti-labor views, with one radical member calling for protesters to be crucified. While foreign investors would be happy to see the situation stabilize, its unlikely that the death of their workers is in their interests.

Unions are skeptical of the government’s intentions. However, in this highly unionized workforce, the government cannot attract foreign investors without engaging the unions.

Meanwhile, the government is frantic to get Tunisian employed. A report today from the Financial Times states that the government is looking  to negotiate greater Tunisian immigration to Europe:

Mr Dimassi (Tunisia’s Finance Minister, Ennahdha ) says the government has been trying to convince European authorities to allow for “organised immigration” to the European Union to take some of the pressure off.

Increased emigration may help, but it seems a rather dramatic solution for the most fundamental issue in post-revolutionary Tunisia.

The FT goes on to explain various formulas the government is considering to create greater employment. This is a bit like adding a prosthetic arm to a patient that is still hemorrhaging. You need to stop the bleeding first. The proposed solutions, increased aid to young graduates and more government jobs are exactly what the former regime did in the weeks preceding the revolution. Ben Ali promised hundreds of thousands of jobs – but the promise was empty – because the system was broken and needed reform.

In order for growth to resume and investment to return, Tunisia needs to have a compact with labor that assures union rights, while forming credible mechanisms to resolve negotiations. Without it, the government just has promises and debt. Ennahdha has so far proved unable to to negotiate this compact but its survival depends on it.

Will economic liberalism hurt Ennahdha?

With the elections finalized and  the constituent assembly set to begin work on November 22, Tunisia is finally moving on from a country in transition to a country moving forward. Ennahdha’s economic compromises has opened up the party to charges that they have abandoned their campaign promises and the middle class who elected them.

The big winner in the elections was the moderate Islamist party Ennahdha, which received 90 of 217 seats in the assembly. As their victory became clear, they immediately began a campaign a to assure key constituencies that their policies would ensure the economic stability of the country.

Ennahdha’s biggest struggle has and will likely continue to be its struggle to square the circle of their campaign promises for social justice with their neo-liberal economic policies. Ennahdha campaigned on the promise of jobs, dignity, and cleansing the state of its endemic corruption. Since the elections, they have spent most of their time trying to convince the business class and foreign investors that their policies will be beneficial to them. Many in this left-leaning, socially progressive country see this as an affront to the masses that helped elect Ennahdha. Since October 23, Ennahdha leaders have reached out to foreign leaders (investors) in Qatar, visited the Tunisian stock exchange, met with business leaders, and promised to move forward the Tunisian dinar’s convertibility. While this has delighted foreign and domestic markets, it has left many disenchanted.

The issue of currency convertibility could prove to be particularly divisive. While economists have long called for Tunisia to open its currency market (the dinar is tightly controlled and non-exchangable with other currencies). However, the likely short-term effect would be an immediate fall in the dinar.

This would greatly benefit foreign investors looking to buy assets in a newly liberalized Tunisian economy, but would be disastrous for Tunisian middle class savers, who have already been squeezed by Ben Ali’s crony capitalism over the last 20 years. Prices on everything from televisions to tuition abroad would rise for those paid in dinars – that is – the middle class. Much of Ennahdha’s popular support came from these same voters, who cast their ballots for the party they thought would best root out corruption in the system. It is these same voters who will feel abandoned if their savings decrease while the country transforms into a playground for rich foreign investors.

While countries like Qatar and the UAE would certainly benefit from a more open investment climate in Tunisia, it is the position of Europe that is the most important. Tunisia send over 70 percent of its exports to Europe and receives more foreign investment from Europe than from all other regions of the world. Over 1,250 French companies alone operate in Tunisia. Despite these links, Rached Ghannouchi’s first post-election pronouncement was that Tunisian’s should concentrate on Arabic, rather than French. Relations between Ennahdha and France, in particular, appear strained. Most importantly, however, is that given the European debt crisis, it does not appear to be in a position to support the Tunisian economy, despite promises from the G8.

The surprise showing by Aridha, led by a former Ennahdha leader who splintered from the group and ran a highly populist campaign, shows that Ennahdha already has a weakness against populist parties. Aridha beat Ennahdha in the birthplace of the Tunisian revolution, Sidi Bouzid, and performed quite well throughout less developed parts of the country. While it benefited from the largesse of its leader and his satellite TV station, which many accused of breaking campaign advertizing rules, its highly populist message of social justice, handouts, and a return to Islam resonated with enough voters to allow it to receive 26 seats in the Constituent Assembly, third best among all parties. While Aridha appears to be falling apart as a coalition, its success shows that Ennahdha is not the only party that can earn the votes of Tunisians.

Ennahdha will have limited time to help turn the country around. It will be pressured from left and right, from the most secular to the most religious. Its supporters have high expectations and want results quickly. Perhaps it is not surprising that according to recent reports, while Ennahdha will fill 11 of 15 ministries with its own people, they are not aiming to take any of the economic positions in the next government.

 

Bread, water, no Ben Ali – Debating the Social Contract

In a recent article World Bank economist Jean-Pierre Chauffour argues that the transitions in the Middle East and North Africa are a moment when the Arab people can throw off the shackles of economic illiberalism and create a new social contract. I think he has misread the will of the Arab people.

The end of the regime

“Bread, water, no Ben Ali”

I agree fully with his point that this is truly the remaking of the social contract for the Arab world (a 21st Century Social Contract, if you will ;)). Even in countries that are not undergoing widespread unrest or a transition period, it is clear that Arab citizens have changed the way they view their relationship with the state. This is an incredible change to witness.

But he goes on to say:

…what the Arab people and  their leaders, and to some extent the international community, have yet to fully contemplate is that the social contract has to be seen as a whole, and modified as a whole.  With one side of the contract gone (hopefully for good), the other side–i.e., the various social entitlements, privileges and rents—must also go.

If I understand the argument correctly, Chauffour is saying that one cannot make the difference between the destructive, authoritarian leaders, and the paternalistic, subsidy driven states they controlled. With one gone, the other must go too. He calls the continuing of one without the other a “self contradiction” in the movement toward democracy. He uses the slogan from the Tunisian revolution “Dignity before bread,” implying that the uprising was for individual freedom and against the overarching power of the state.

The logic here does follow. When he is referring to the corrupt system of rents and mismanagement, he is absolutely correct – this is a vestige of the past dictators ,and one that the uprisings have rightly fought to replace.

But when he refers to social entitlements, he is stepping into dangerous territory. These social entitlements include basic social services, education for women, and investments in higher education. Another slogan from the protests was “Bread, water, no Ben Ali.” This is hardly the call of a people who would like the end to their bread subsidies.

Wholesale reform or a democratic debate

In my opinion, Chaffour’s point that the social contract has or must be changed as a whole, rather than gradually or in various stages is flawed. The reality is that social contracts are always evolving. Arguably, one has seen a great deal of change in the social contract in the U.S. over the last thirty years with the liberalization of financial markets and the slow dismantling of the welfare state. This has been the result of continuous public debate in America. These debates continue in all democratic societies as people look for more or less state control over their lives.

More critical than a wholesale change in the social contract (the baby with the bathwater), is a public debate over the role of the state as part of the democratic transitions in the Arab world. While economic liberalization will be part of this debate (for and against), it is more important that these transition countries engage in a public discourse upon which the majority of the people can agree on the correct role of the state in their lives.

Indeed, Mr. Chauffour makes this point eloquently:

The opportunity for the young Arab generations to learn, work, save, own, invest, trade, protect, and eventually prosper will critically depend on how the “new” Arab countries strike the balance between freedom and coercion in the new social contracts. Italics added.

Striking the balance – through public debate and democratic elections – is the first and most important step for these newly free countries. The rest will follow.

McDonald’s in Tunisia – Non Merci!

Tunisians are taking a page out of French activist Jose Bove‘s manual, and standing up to American multinational efforts to set up shop in Tunisia. (Jose Bove is the French unionist and member of the European parliament made famous for ransacking a McDonald’s restaurant in France in 1999.)

A recent article in Nawaat, by Abdelouadoud El Omrani, highlighted Tunisian distrust toward the greasy fast food fare of McDonalds and the like. El Omrani’s article translates into English as “No McDonald’s in Tunisia, Give me my Sandwich and Soup, Thank you.” A corresponding Facebook page has a delightful gallery of photographs of Tunisian tuna sandwiches.

Headline from Nawaat

Non-Tunisian readers may be surprised to find out that Tunisia actually has no foreign chain restaurants. Rumor has it that kleptocratic Ben Ali family members tried to assume controlling stakes in franchises (as they did with French ones, like Peugeot and Bricorama), and it just wasn’t worth it for American companies to make the investment. Contrast with the recent announcement on HuffPo that IHOP is opening 40 new restaurants in the region!

As probably the number one fan of Tunisian food I know, I can’t say that Mr. Omrani. A 4 dollar lunch here in Tunisia will get you a whole fresh fish, several delicious salads, a baguette, french fries, and in case you’re still hungry, a plate of spaghetti. Compare that to a 6 dollar “value meal” and the man has a point. His defense of Tunisian food is exemplary!

One does wonder though if McDonald’s does get its franchise here, whether Tunisia may follow France and be the loudest critics, and the biggest consumers…..