Russia Coal Sector Restructuring Socialassessment 19703
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Russia Coal Sector Restructuring SocialAssessment 19703 ................. ......... 19 9 6 Public Disclosure Authorized -. n. -0 X ~~~~~'.. .. -, Public Disclosure Authorized Public Disclosure Authorized Ayse Kudat and VadimBorisovFI EC P Public Disclosure Authorized The World Bank ECA Country Department III Infrastructure, Energy and Environment Operations Division RUSSIA COAL SECTOR RESTRUCTURING SOCIAL ASSESSMENT Ayse Kudat and Vadim Borisov The World Bank ECA Country Department m Infrastructure, Energy and Environment Operations Division The findings,interpretations, and conclusionsexpressed in this paper are entirelythose of the author(s) and should not be attributedto the Governmentof the Russian Federation,to the WorldBank, to its affiliated organizations,or to membersof its Board of ExecutiveDirectors or the countriesthey represent. I TABLEOF CONTENTS PREFACE ACKNOWLEDGEMENTS EXECUTIVESUMMARY CHAPTER1: INTRODUCTIONAND BACKGROUND......................................................... 1 Coal Industry:Background .................................................... 1 Key Players and TheirInterests .................................................... 3 Social Impactsof Coal IndustryRestructuring ........................ ............................ 5 World Bank Involvement.................................................... 8 CHAPTER2: SOCIALASSESSMENT: OBJECTIVES AND METHODOLOGY................... 10 Objectivesand Methodology................................................... 10 Survey Areas................................................... 12 CHAPTER3: FINDINGSOF THE SA: ISSUESAND RESPONSES ...................... .................14 Develop CommunitySpecific Responses ................................................... 14 Focus on VulnerableGroups ................................................... 26 ImproveLiving Conditionsand Housing................................................... 33 RecognizeDiversity in CompensationExpectations ................................................... 35 DiscourageGovernment-Funded Voluntary Relocation ................................................... 40 RecognizeHigh Levels of PerceivedVulnerability ................................................... 45 IncreaseTrust in the System................................................... 48 FIGURES Figure 1: Place of Birth Figure 2: Age Distributionand Family Type Figure 3: Miningas a Shareof Total Employment,1992 Figure 4: EducationLevels Figure 5: EducationLevels -Pensionersvs. Unemployed Figure 6: Employment Structure - Vorkuta Figure 7: Employment Structure - Kiselovsk Figure 8: Living Conditionsin Vorkuta and Kiselovsk Figure 9: Desire to Move Figure 10: WorkerVulnerability Figure 11: Need for SocialAssistance - Vorkutaand Kiselovsk Figure 12: OrganizationsTrusted To DistributeMoney And Benefits II TABLES Table 1: Monthly AverageHousehold Income Per Capita Table 2: Labor StructureIn Coal Basins Table 3: Employeesin Different Sectors Table 4: HouseholdsWith At Least One Person EmployedOr Retired From Coal Sector Table 5: HousingConditions In SettlementsOf Vorkuta Table 6: AvailabilityOf ModernConveniences In SettlementsOf Vorkuta Table 7: ProfessionalSpecialization Table 8: Employment Structure - by Gender Table 9: OpinionsRegarding Opening Own Business Table 10: ReadinessTo Move AmongMiners And Non-Miners Table 11: OpinionsRegarding Mine Closures BOXES Box 1: PsychologicalReactions To Mine Closures- GlobalExperience Box 2: History Of Vorkuta Box 3: CopingWith Uncertainty:Responses To The Closing Of PromyshlennayaMine Box 4: UnemploymentBenefits Box 5: Social AssistanceBenefits in Russia Box 6: Miners' Benefitsin DimitrovaMine Box 7: Halmer-YuMine Closure and Relocation Box 8: Proceduresfor Mine Closures Box 9: PromyshlennayaMine Closing Box 10: WorkersAnd The CherkasovskayaMine Closing REFERENCES ANNEX 1: SAMPLINGMETHOD PREFACE Russia's programfor restructuringits coal sector affects a wide range of interest groups who have a stake in the sector. As part of the preparationof a Coal Sector AdjustmentLoan (SECAL) and an ImplementationAssistance Project, the Government of the Russian Federationand the World Bank supportedthe preparationof this Social Assessment. The assessmentwas a joint effort between Bank staff and Russian social scientists who systematicallylistened to the views of the people: the miners,their families and communities. The views of a broad range of other interestgroups were also solicitedand are reflectedin this study. The Social Assessmenthad an important impact both on the substance and process of WorldBank assistance. With regard to substance,the Social Assessmenthelped reorientthe thinkingof the Bank, and, we believe, of the Government,towards more relevant and transparent institutional mechanismsto cushionthe impact of the restructuringon miners and affected communities. The work also helped foster a broad consensuson the need for a permanentmechanism of social monitoringand stakeholder participation in the restructuringof the coal sector. With regard to process, the Social Assessmentallowed both the Govermmentand the Bank to develop a credible basis for discussingwhat beneficiaries did and did not feel was important to improving their lives. That the Russian coal restructuringprogram now places an emphasison funding social assets divested from the coal industry is, in great part, due to the SocialAssessment's findings. This Social Assessmentis one of the first to be associatedwith a policy based loanto be fundedby the World Bank. It has been an importantinstrument in allowing attentionto be given to social factors essentialto the long term successof the reform agenda. In light of the broad interest in the social impact assessment of sector restructuringin general and of the special interest of coal restructuringin transitioneconomies, this report is being publishedfor distributionto the generalpublic. JonathanBrown ConstantineMichalopoulos DivisionChief SeniorAdviser Europe & Central Asia - CountryDepartment III Europe& CentralAsia Infrastructure,Energy and EnvironmentOperations Division CountryDepartnent III Acknowledgements Ayse Kudat, PrincipalEnvironmental Sociologist, is the task manager for the Russia Coal SectorRestructuring social assessmentand the main authorof this report. The field work for the assessment and initial analysis of the data were carried out by Vadim Borisov (Institute for Comparative Labor Relations) with support from Peter Bizyukov and KonstantinBurnyshev. The analysis of the data as reflected in the social assessmentwas completedby Bulent Ozbilgin,who, together with Nezahat Oz;men,also prepared charts and tables. Janis Bernsteindrafted sectionsof the report. The author wishes to acknowledgethe strong support of Constantine Michalopoulos, Senior Adviser to the Director (EC3DR); David Craig, who is the task manager for the World Bank Russia Coal Sector AdjustmentLoan (SECAL);Selina Shum, task manager of the Coal Sector RestructuringImplementation Assistance Project; and of Division Chiefs JonathanBrown (EC3IV)and Anand K. Seth (EMTEN). i EXECUTIVESUMMARY i. Russia's coal sector is undergoingsignificant restructuring. While intended to promote long-term economicimprovement, the restructuringprocess involvesclosing many unproductive and unsafe mines - and consequently,losses of jobs and real incomes. Those employedby the mining industry,as well as numerous other enterprisesand public services,are all affected,as are their familiesand communities.The Government of the Russian Federationhas requestedWorld Bank fundingto support Russia's coal sector reform program, specificallyto: (i) reduce the impactof the coal sector on the federalbudget by supportingthe reduction,and eventualelimination, of subsidies;(ii) support a restructuringprogram to reduce the size of the industryto increase efficiency;(iii) cushion the impact of the restructuing on coal miners, their families, and affected communities;and (iv) promote the long term sustainabilityof the coal sector through the establishmentof a competitive,commercial industry. As one of the first steps in preparing this support, a team of local social scientistscarried out a social assessment(SA) in collaborationwith the Ministry of Economyof the Russian Federationand the World Bank. ii. The main objectivesof the SA were to: (a) identifykey stakeholdersand establish an appropriate frameworkfor their participationin the coal sector restructuring;(b) assess the socioeconomiccharacteristics of households in mine basins; (c) determinehow miners and employees of other sectors are affected by restructuring, as well as understand the labor market and workers' expectations with respect to social protectionand compensation;(d) characterizeattitudes toward government-sponsored relocation programs that promise free housing to residentsof Northernregions affectedby the coal sector restructuring;(e) assessthe level of trust toward varioussocial institutions;and (f) determinehow people affectedby mine closureswould like to see the restructuringproceed. iii. To achievethese objectives,the SA involvedconsultations with a broad range of stakeholdersfocusing primarily on miners, their families, and miningcommunities. In particular, the SA team carried out several thousandformal and informalinterviews and group discussionsin four of the major coal basins;Vorkuta, Tula, Rostov,and Kemerovo. The team also carriedout a surveyof 800 householdsin Komi Republic-Vorkutaand Kemerovo-Kiselovsk,and prepared case studies based on several hundred interviews. Several hundred