chapter  7
19 Pages

The social consequences of coal mine restructuring


In recent years the Ukrainian government has pursued a radical coal industry restructuring programme. Prior to the beginning of the programme in 1996 the industry faced a number of severe problems. These included the legacies of many years of under-investment, obsolete technologies, low productivity, over-manning and very poor health and safety standards. Reform of the coal industry has occurred in the context of an economic crisis related to post-Soviet economic and political transition. The government faced a decision as to whether to continue subsidising the coal industry – which was likely to become an increasing burden on the state budget – or whether to radically reform the sector. In late 1995 the government adopted a coal industry restructuring programme under which 80 loss-making coal mines were to be closed. According to the World Bank, which helped to elaborate the programme and provided loans to finance it, during the programme 260,000 mine workers were to leave the industry, including 64,000 between 1996 and 1999. Since coal production in Ukraine is geographically concentrated in the Donbas, reform required not only the closure of loss-making mines but also measures to mitigate the adverse social impacts of mine closures and the strengthening of the system of social protection for redundant miners and their families.