US embassy cable - 05ANKARA1321

UNCLAS SECTION 01 OF 02 ANKARA 001321 
 
SIPDIS 
 
STATE FOR DRL/IL PLEASE PASS TO DOL/IL BILL BRUMFIELD 
TREASURY FOR INTERNATIONAL AFFAIRS CPLANTIER AND ASHAH 
 
E.O. 12958: N/A 
TAGS: ECON, EIND, ELAB, PGOV, SOCI, TU 
SUBJECT: TURK-IS LABOR UNION PROTESTS CLOSURE OF 
STATE-OWNED PAPER FACTORY 
 
 
(U) Classified by:  Political Counselor John Kunstadter, 
reasons 1.4 (B) and (D). 
 
1.  (U) Summary.  Turkish Izmit-based paper factory SEKA has 
been in continuous operation since 1934.  Although the GOT's 
Privatization Administration closed this loss-making factory, 
Seluloz-Is, a branch of Turk-Is Labor Union, protested the 
closing and discouraged its members from taking advantage of 
SEKA's severance package.  After a March 3 country-wide 
illegal solidarity strike by Turk-Is workers, the 
Privatization Administration (PA) concluded an agreement to 
transfer the SEKA factory and workers to the Kocaeli (Izmit) 
municipality.  End summary. 
 
2.  (U) Since 1934, SEKA has been a government-owned and 
operated paper factory in Izmit in northwestern Turkey. 
According to Parliament's PA Vice President Ismail Destan, 
the plant is antiquated, expensive to run and employs 724 
workers, at least twice the number of highly-paid, unionized 
civil servants as needed.  The newest machine in the factory 
is 45 years old. 
 
3.  (U) A Finnish consulting company specializing in 
privatizations concluded that the SEKA plant, marked for 
privatization since 1997, was inefficient, out-of-date and 
should be closed.  The factory, located in the middle of the 
town, is next to the Sea of Marmara.  Even if the factory had 
been modernized, it would have been impossible to obtain 
environmental easements for the wastes produced in paper 
manufacturing.  In 2004, the PA decided to sell SEKA's 
machinery and designated the property a "green space" for 
educational, cultural, artistic, social and scientific 
purposes.  During a March 3 meeting, Destan told us the area 
had the second highest levels of cancer in the country and 
speculated the paper factory was a possible reason for the 
illnesses. 
 
4.  (U) Nevres Yuksel, Turk-Is labor union international 
affairs director told us March 2 that the SEKA factory had 
closed and the workers' severance pay and bonuses had been 
deposited in their bank accounts.  He commented that Turk-Is 
president Salih Kilic met with Prime Minister Erdogan 
regarding SEKA's closure, but did not receive a response 
regarding his concerns about its impact on the workers. 
 
5.  (U) Yuksel conceded that he had been advised the SEKA 
paper factory had long been losing money, most recently, 
Turkish lira (TL) 33 trillion ($25 million) in 2004, but 
blamed the government for these losses, saying it had not 
maintained or renovated the factory properly during its 
ownership.  He believes the paper factory could have been 
made economically efficient with modern machinery. 
 
6.  (U) Nevertheless, the PA's Destan presented us with 
financial reports showing SEKA has been running at a 50 
percent operating loss for some time, losing $400 million 
over the past seven years, and cited high labor costs as a 
major factor.  He noted that one worker cost SEKA TL 3 
billion ($2300), including benefits, per month while a 
private sector worker cost TL 800,000,000 ($615) in today's 
labor market.  SEKA found operating with these labor costs 
prohibitive. 
 
7.  (U) Destan explained that the average public worker 
receives at least 50 percent more in wages and benefits than 
a private sector employee.  It became evident that it would 
be more cost-effective to give the workers a severance 
package and to close the factory rather than consider 
renovation.  Production stopped on January 1; out of 724 
workers in the factory, only 120 remain to close it down. 
Seluloz-Is asked the courts to cancel the closure but the 
Ankara Administrative Court ruled against the union. 
 
8.  (U) In closing the factory, the PA offered workers the 
opportunity to transfer to a Mersin paper factory constructed 
in 1980, and offered incentives such as housing and 
transportation, even making this offer twice, hoping to 
attract around 200 workers to move to the new location. 
Seluloz-Is pressured workers not to accept the offer and 
today there are 110 empty spacious houses in Mersin. 
 
9.  (U) The PA offered workers the following options:  (1) to 
receive severance pay plus a salary for eight months if they 
wanted to establish their own business; or (2) public sector 
employment with salaries commensurate with their education 
levels, albeit at lower levels than their previous 
comfortable SEKA salaries.  For example, a university 
graduate would earn TL 761 million ($585) per month and a 
high school graduate TL 681 million ($524), or one-third of 
the SEKA salary.  Currently the minimum wage in Turkey is TL 
540 million ($415) per month.  Since workers did not accept 
these offers, the PA deposited severance payments in the 
employees's bank accounts and "severed relations." 
 
10.  (U) Destan asserted the PA tried to handle the 
transition so it would not be overly disruptive for the 
worker.  Seluloz-Is instructed its members to reject the PA's 
offers.  Forty-eight people did apply to work in Mersin but 
reconsidered when, according to Destan, the union directed 
threats at their families and children.  Sixteen workers are 
currently in Mersin but are being threatened that their 
houses will be burned down and their children harmed.   These 
offers, available twice, expired January 1 and February 18. 
 
 
11.  (U) Yuksel believes that unions are less efficient today 
after the 1980 coup and commented that after that event, 
solidarity strikes were forbidden in Turkey.  However, on 
Friday, March 4, Turk-Is members throughout Turkey remained 
at their workplaces all night in a demonstration of 
solidarity with the workers of the closed paper factory. 
Critical of the GOT's privatization program, CHP opposition 
leader Deniz Baykal, along with a group of parliamentarians, 
visited Turk-Is headquarters on March 4 to express support 
for the striking SEKA workers.  In addition, according to 
Yuksel, the prior week former Prime Minister Bulent Ecevit, 
who originally authorized the plant's privatization, came out 
in support of the workers.  In a rare display of candor from 
a labor union official, Yuksel commented that personally he 
did not think the solidarity strike would be very effective, 
but Turk-Is members wanted to demonstrate in support of the 
workers at the closed factory.  Speculating the GOT would not 
dare to arrest sympathy strikers while Turkey is working to 
achieve harmonization with the EU, he was unable to predict 
what would happen in the aftermath of the strike. 
 
12.  Less than one week later, in response to the illegal 
solidarity strike, the GOT is once again offering 
alternatives to SEKA's displaced workers.  As a result of 
Transportation Minister Binali Yildirim's efforts at 
mediating the privatization dispute with Turk-Is President 
Salih Kilic, Seluloz-Is President Ergin Alsan and Izmit 
Metropolitan Municipality Mayor Ibrahim Karaosmanoglu, SEKA's 
holdings and workers will be transferred to the Izmit 
Municipality.  Yuksel believes it highly improbable the 
factory will reopen and expects it to be sold and the land 
surrounding it will be used as a green space, as originally 
planned.  The municipality is expected to employ SEKA's 
workers at salaries approximating what they previously earned 
rather than the significantly lower amount prevailing in the 
private sector. 
 
13.  Comment:  Under the economic reform program the GOT has 
worked out with the IFIs, one key objective is to privatize 
or otherwise dispose of State-Owned Enterprises (SEEs) 
especially those causing a financial burden on the national 
budget.  Though privatization can come at a cost to the SEE 
employees -- it means a lower number of workers employed, 
lower worker salaries and fewer guaranteed benefits than in 
the past -- the PA has tried to mitigate these effects with 
the above-mentioned employment incentives.  End comment. 
EDELMAN