Organized Labor and restructuring: Coal mining in the Czech Republic and Romania

We examine the role of organized labor in the restructuring experience of two coal-mining regions in the Czech Republic and Romania in the 1990s. Under similar external circumstances, the Ostrava region of the Czech Republic undertook early gradual restructuring, whereas the Jiu Valley region in Romania did not undertake restructuring until 1997, which was followed by massive layoffs in the sector. We conduct a quantitative exercise that accounts for mine productivity, labor-market conditions, and constraints in compensating laid-off miners. We show that the belated restructuring in the Jiu Valley was inefficient: gradual restructuring with reasoned compensation would have benefited both the miners and the state. An important factor in the delayed restructuring was the miners' resistance to it. We discuss what motivated their opposition and the consequences.