Experience from coal industry restructuring

Experience from coal industryrestructuring

Simon Walker

CCC/48

July 2001

Copyright © IEA Coal Research 2001

ISBN 92-9029-361-6

Abstract

The second half of the 20th Century was a period of crisis for the Western European coal industry. Throughout the region, hardcoal production fell in response to changing energy and geopolitical conditions, with lower demand in both domestic and exportmarkets. As a result, the number of working mines decreased substantially, and coal industry employment reduced drastically asgreater investment was made in mechanisation while overall output continued to fall. Over the 50-year period, employment inWestern European hard coal mining fell from around 1.8 million to fewer than 100,000. Employment in the region's lignite mineshas also been cut substantially.

This report looks at the measures taken by the authorities in six of the countries affected by coal industry restructuring in the last40 years: Belgium, France, Germany, the Netherlands, Spain and the United Kingdom. Each highlights different aspects of theprogrammes put in place to try to offset the social and economic consequences of the loss of a major employer on the worstaffected communities and regions. Having reviewed the different approaches taken by individual governments, within theregional assistance framework established by the European Union, the report evaluates the experience that has been gained. Theaim is to assist decision-makers in countries with developing or transitional economies, where the restructuring of the coal orother major industries has yet to take place, by suggesting key aspects for consideration, based on this experience.

Currencies

Throughout this report, financial amounts are generally quoted in national ‘currencies of the day’, converted where appropriate toUS dollars to allow broad comparisons to be made. In some instances, these values have been inflated to provide an equivalent interms of current (mid-2001) money. There have, of course, been significant fluctuations in exchange rates between the US dollarand the currencies used in the six Western European countries that form the basis for this report during the 40-year period sincecoal industry restructuring began in earnest. For this reason, no attempt has been made to provide exact conversions, since thetime-frames involved were too long to make this exercise meaningful.

Reference is also made to the European Currency Unit (ECU), an artificial ‘basket of European currencies’ that formed the basisfor European Commission accounting from 1979 onwards. At the beginning of 1999, five of the six countries reviewed here(excluding the UK) became founder members of the Euro-zone, leading to the adoption of a common currency, the Euro, in2002. The Euro ( ) replaced the ECU at parity. As of July 2001, exchange rates between the Euro, the US dollar and the sixnational currencies were:

Country Currency symbol to US dollar

Belgium BFr 46.40France FFr 7.54Germany DM 2.25Netherlands Fl 2.53Spain Pta 191.4United Kingdom £ 0.70Euro 1.15

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3Experience from coal industry restructuring

Contents

1 Introduction 51.1 The historical context 61.2 Social and economic aspects 61.3 Providing new skills 61.4 Scope and methodology 71.5 Report structure 71.6 Acknowledgements 81.7 Definitions 8

2 The restructuring of the Western European coal sector 92.1 The changing energy scene 92.2 Responses to changing coal demand 9

2.2.1 Belgium 92.2.2 France 102.2.3 Germany 102.2.4 The Netherlands 112.2.5 Spain 112.2.6 The United Kingdom 11

2.3 The role of the European Union 122.4 Assistance to areas affected by coal industry restructuring 12

2.4.1 National assistance 132.4.2 European Union assistance 13

2.5 Coalfield Communities 14

3 Belgium 153.1 Background to closure 153.2 Social impact 163.3 The Future Contract 173.4 Organisations involved 173.5 European Community involvement 183.6 Employment options 183.7 Training schemes 193.8 Funding levels 193.9 Chapter discussion and conclusions 20

4 France 224.1 Background to closure 224.2 Social impact 234.3 Plans Sociaux 244.4 Organisations involved 244.5 European Community involvement 254.6 Employment options 254.7 Training schemes 264.8 Attracting inward investment 264.9 Chapter discussion and conclusions 27

5 Germany 295.1 Background to restructuring 30

5.1.1 Hard coal 305.1.2 Lignite 31

5.2 Social impact 315.2.1 Hard coal 315.2.2 Lignite 31

5.3 Organisations involved 325.3.1 Hard coal 325.3.2 Lignite 33

5.4 European Community involvement 335.5 Employment options 33

5.5.1 Hard coal 335.5.2 Lignite 34

5.6 Producer diversification 355.7 New employment opportunities 355.8 Funding levels 355.9 Chapter discussion and conclusions 36

6 The Netherlands 386.1 Background to closure 386.2 Social impact 386.3 Organisations involved 396.4 European Community involvement 406.5 Employment options 406.6 New employment opportunities 406.7 Funding levels 406.8 Chapter discussion and conclusions 41

7 Spain 437.1 Background to restructuring 437.2 Social impact 457.3 The Coal Plan 457.4 Organisations involved 457.5 European Community involvement 467.6 Employment options 467.7 Training schemes 467.8 New employment opportunities 477.9 Other initiatives 477.10 Chapter discussion and conclusions 48

8 United Kingdom 508.1 Background to restructuring 508.2 Social impact 528.3 Organisations involved 538.4 European Community involvement 548.5 Employment options 548.6 British Coal's training schemes 558.7 British Coal Enterprise 558.8 Attracting inward investment 568.9 Post-privatisation initiatives 568.10 Chapter discussion and conclusions 57

9 Evaluation and guidelines 599.1 The mining psyche: a strong sense of community 599.2 Maintaining economic activity 609.3 The risk to social structures 609.4 Early retirement or alternative employment? 619.5 Inter-agency relationships 629.6 Maintenance of community services 629.7 Attracting alternative employment 639.8 Job search assistance 639.9 Provision of training 639.10 Provision of business support and financial advice 649.11 Education 649.12 The costs involved 649.13 Community-based responses 659.14 Guidelines 65

10 References 68

Appendix – Recent experience outside Western Europe 72

A1 Czech Republic 72A2 Cape Breton 72

4 IEA Coal Research

1 Introduction


Over the past 50 years, there has been a significant reductionin coal mining activity in most Western European countries.Complete closure of the coal industries in the Netherlandsand Belgium has been followed by progressive sizereductions in those in France, Germany, the UK and Spain.Coalfield areas in which either major restructuring orcomplete closure has occurred since 1960 are shown inFigure 1. Although each scenario has been different in termsof the length of time involved and the scale of restructuring,in each case the government has faced major demands increating new employment opportunities for mining industrypersonnel and in providing the social support needed to offsetthe impact of mine closure on what have often been

single-employment communities. To put the situation intocontext, during the second half of the 20th Century directemployment in hard coal mining in Western Europe fell fromaround 1.8 million to fewer than 100,000 (see Table 1), towhich must be added the multiplier effect on business andcommerce in the regions most affected.

Today, a number of other countries are in the process of coalindustry restructuring, and are experiencing similarconstraints to progress in terms of the social consequencesresulting from mine closures. Such countries arepredominantly those in which the coal industry has beenunder state control – Russia, Ukraine, Poland, Romania,China and India are examples – although there can beimplications for governments of countries faced withprivate-sector closures, especially where these have asignificant impact on employment in individual communities.Recent examples include the restructuring of the Cape BretonDevelopment Corp. mines in Nova Scotia, Canada, where theformer operating company was a Crown (state) Corporation,and various private-sector closures in isolated areas ofAlberta and British Columbia.

This report aims to summarise the experience gained duringthe contraction of the coal industry in Western Europe, withthe intention of making this information readily available topolicy-makers in government and financial institutionselsewhere who have responsibilities relating to the facilitationof restructuring. It does not set out to make judgements overthe economic policies adopted by the Western Europeangovernments in control during the period, since these are partypolitical matters for which the proponents are answerable totheir own electorates. Rather, the report seeks to highlight thevarious options that have been implemented, with whateverdegree of success, under the economic conditions pertaining atthe time. It also draws attention to the risks inherent to nationaland regional governments, and to society as a whole, of failingto make adequate provision for the social and economicconsequences resulting from major industrial contraction.While the report focuses on the coal industry, the conceptsdiscussed are, of course, equally applicable to the restructuringof other major industrial sectors.

hard coal lignite

Figure 1 Coalfield areas in Western Europe inwhich restructuring or closure hasoccurred since 1960

Table 1 Employment in the principal Western European coal-producing countries, 1960-2000

Country 1960 1970 1980 1985 1990 1995 2000

Belgium 85,000 25,000 21,000 19,000 6,000 0 0France 218,000 123,000 63,000 47,900 22,700 14,700 9,000Germany– Hard coal 490,200 252,700 186,800 166,000 130,300 92,600 53,500– Lignite (former GDR) 100,100 131,100 140,200 112,300 25,900 10,100– Lignite (old länder) 36,000 22,500 21,100 20,200 17,500 14,400 11,200Netherlands 50,000 13,000 0 0 0 0 0Spain na na 36,000 38,000 33,000 22,000 18,000United Kingdom 631,000 320,000 184,400 132,200 53,000 10,500 9,000

1.1 The historical context

The industrial revolution in the latter part of the 19th Centurywas based on the deep mining of coal and the production ofiron, basic industries that developed in France, Germany, theUK and elsewhere in Western Europe. Throughout the secondhalf of the 20th Century, however, reduced demand for coalin the region coupled with the availability of new suppliesfrom lower-cost producers in other parts of the world led to acontinuing decline in hard coal production in these‘traditional’ deep-mining countries. Lignite (brown coal)mining was also affected, particularly by the collapse of theEastern European centrally planned economies in the late1980s and early 1990s. Eastern German lignite productionfell by three-quarters during the 1990s, for example.

In terms of the scale of coal industry restructuring, WesternEurope provides a valuable resource of experience, unrivalledanywhere else in the world. Each of the countries in whichcoal mining has been a major economic force in the past hasundertaken some form of restructuring. In the case of theNetherlands and Belgium, closure of the underground coalmining industry has been total; Dutch hard coal miningended in the mid-1970s, while the closure programme inBelgium dates from the 1980s. The country has, however,retained a small-scale coal industry based on tip-washing.France is still in the process of a phased closure of its coalindustry, with coalfields such as the Nord-Pas de Calaishaving ceased operations in the early 1990s. Output is nowcentred on the Lorraine coalfield, with production scheduledto end in 2005. In Germany, Spain and the UK, thecontraction of the coal industry is continuing against anopen-ended time frame. Germany has also adopted a stagedapproach to downsizing, with probably the longest-runningprogramme of any country in Western Europe, in contrast tothe massive downsizing programme enacted in the UK duringthe 1980s and early 1990s. In Spain, meanwhile, the threat ofcoal industry closures, particularly in the northern region ofAsturias/León, is providing new challenges for both nationaland regional governments as they endeavour to balancecontinuing subsidisation of the coal industry with the risk ofsocial and economic problems in an area with few other jobopportunities.

In each case, national governments have pursued differentpolicies, with individual implementation affected by factorssuch as the speed of the restructuring, the availability ofalternative employment opportunities in the coal-miningareas involved, the political perspective of the government ofthe day, changing domestic demand for coal, and the impactof subsidies on coal production. The input of the EuropeanCoal and Steel Community and the European Union’scompetition and regional structural reform policies have alsobeen important in this context.

1.2 Social and economic aspects

The effects of coal mine closure on individual communitiescan be devastating, especially where closure is sudden.Traditionally, underground coal mining was labour-intensivewith a workforce characterised by strong communal and

6 IEA Coal Research

Introduction

interpersonal loyalties. The rationalisation of productivecapacity has often involved the disappearance of the basicsource of income for all, or a large part, of the workforce inareas that offered few alternative employment opportunities.Similarly, the rapid and extensive cut in lignite productionthat occurred in eastern Germany resulted in majorchallenges for the government of the newly reunited countryin terms of generating new employment for a workforce thathad evolved under the former centrally planned system.

The economic and social impacts on coal miningcommunities that result from mine closure reflect not onlythe immediate loss of jobs within the industry itself, but theknock-on effect on business and commerce over a muchwider area. Thus, for example, closure affects bothcompanies that previously supplied specialist equipment andservices to the mine concerned, and those that provided basiccommunity services – such as shops or petrol stations. Themultiplier effect, often quoted as one of the benefits of newemployment opportunities within an area, also acts in thenegative sense when the primary source of employment ends.Within the affected community itself, the sudden closure of amine has been compared to personal bereavement, especiallywhere the mine has been the principal or only employer.Without other job opportunities that provide a level ofincome and security comparable to that achieved beforeclosure, social pressures on the community can quickly leadto its deterioration, with out-migration, increased crime andgreater poverty all being well-recognised features ofcommunity decline. While it is beyond the capabilities of thisreport to review the multiplier effects of industrialrestructuring in detail, it is important to recognise thateconomic regeneration programmes have to be capable ofaddressing a much more extensive problem than the primaryjob losses alone.

The severity of the impact of a mine closure can, of course,be mitigated in a number of ways, not least of which iscareful consultation and planning between the variousgovernment bodies involved, the mine operator, the tradesunions representing the workforce, and the community itself.For this reason, mining communities in those countries thathave adopted phased closure policies are at a distinctadvantage to those in which restructuring has beenprecipitous. Planned closure provides the opportunity forinfrastructural improvements and the introduction of newindustries before mining jobs are lost, together with theopportunity for former miners to gain the new skills that theymay need whilst still in employment. At the other end of thespectrum, leaving communities to fend for themselveswithout such support may be a short-term expedient, but willalmost inevitably lead to higher economic and social costs inthe longer term.

1.3 Providing new skills

Throughout Western Europe, the trend over the past 30 yearshas been towards the replacement of traditional heavyindustries by an expanding service sector – the‘post-industrial’ economy. In common with the coal industry,ship-building, steelmaking, textile production and mining in

general have all either reduced in importance or havedisappeared completely from the economic landscape. Allwere mass employers of both craftsmen and manual workers,while their 21st Century replacements in high-technologyindustries or in pure services demand a completely differentrange of skills. In the past, the closure of one mine oftenbrought job opportunities at another, so helping to mitigate,or at least conceal, the effects on the work force. Suchinternal movement is no longer possible today, since mineclosure equates to a reduction in overall productive capacity.Skills must therefore be replaced rather than merely beingre-employed elsewhere.

However, another significant factor for consideration is the‘trainability’ of the former mining workforce. If Britishexperience can be taken as typical for coal-mining industriesin other countries – both in Western Europe and elsewhere –mining has traditionally attracted people who mightotherwise have found employment in manual occupations.Research carried out in the early 1990s on the employmentprospects of former miners in the Yorkshire coalfield inEngland, for example, revealed that an alarming proportion(over 60%) of the people who participated in the studies hadno secondary educational qualifications whatsoever. Only15% had received subsequent specialised training forindustrial qualifications. In consequence, potential employersin comparable industries – construction, transport and so on –were cited as being reluctant to offer jobs to former minerson account of their single-industry experience (Critcher andothers, 1995). Those such as electricians and fitters, whoseskills are readily transferable to other industries, were twiceas likely to have been successful in finding new work thanformer miners or surface workers who had had nocomparable trade training. It is to be anticipated that a similarprofile of work force education and skills may well exist incountries with developing or transitional economies, in whichcoal industry restructuring has yet to be undertaken orcompleted.

It is clear that not only must there be a commitment toretraining as part of any closure programme, but that theretraining has to be appropriate to both the trainee and thepotential employer. It is wasteful in resources and damagingto morale if the training offered cannot meet these specificdemands, especially if the service is provided for short-termpolitical ends rather than for the long-term benefit of thetrainee.

1.4 Scope and methodology

In some respects, this report is unlike most of thosepreviously published by IEA Coal Research – the Clean CoalCentre, in that its subject material is non-technical.Nonetheless, in common with other IEA-CCC publications, itdemonstrates the possibilities for concepts and policies to betransferred, in this case from Western Europe, to othercountries in order to facilitate the restructuring of their owncoal and other heavy industries.

The report draws on the experience gained in six WesternEuropean countries in which coal production has been scaled


Introduction

down or has ceased: Belgium, France, Germany, theNetherlands, Spain and the United Kingdom. It also includesbrief descriptions of the experience gained in Nova Scotia,Canada, and in the Czech Republic. Compilation of theinformation has involved both desk research and the carryingout of in-depth interviews with government, industry andcommunity experts in each of the countries concerned, inorder to obtain as broad a viewpoint as possible over thepolicies adopted in each country. There are, of course, somerisks involved in this approach, principally in the historicalcontext. In the Netherlands, for example, closure of theindustry took place nearly 30 years ago, and few peoplecurrently in positions of authority have personal experienceof the closure process. Thus the identification of appropriatesources of information, other than historical documents, hassometimes been difficult.

Key issues addressed in this report include:● the social and political background in each country at the

time coal industry restructuring took place;● the timescale of restructuring and the numbers of people

affected;● governmental approach;● the split and coordination of departmental responsibility;● the operation of other agencies on the ground;● other related social issues, such as housing, long-term

medical care and so on;● the success/failure rate over the short and long terms,

and by the age profile of the mining industry workersinvolved; and

● lessons that can be learnt from these policies andprogrammes.

1.5 Report structure

Following this introduction, the report is divided into threemain sections. Chapter 2 addresses the economics andliberalisation of Western Europe’s coal industries on acountry-by-country basis. It also discusses the impact that theEuropean Community has had, both directly through theEuropean Coal and Steel Community and in relation to theassistance provided to specific areas of member countriesthrough regional structural funding.

Chapters 3 to 8 review the experience gained in the sixindividual Western European countries, focusing mainly onhard coal, but with consideration of the impact of job lossesin lignite mining in eastern Germany. Findings from thesechapters are summarised in Chapter 9, which also containssuggestions and guidelines for the potential for transferringWestern European experience to other countries. Experiencegained in Nova Scotia and the Czech Republic is described inthe Appendix, albeit in less depth than for the other countriesreviewed in the report.

Rather than presenting a repetitive picture, each of thecountry reviews endeavours to highlight different aspects ofcoal industry restructuring. These include:● Belgium: An integrated management plan that

incorporated both mine closures and the creation ofalternative employment. Training programmes were

tailored to individual needs, with particular emphasis onnon-Belgian communities in the coalfield area;

● France: A strongly structured approach in which the statecoal-producing company has had responsibility forfinding its former employees alternative work;

● Germany: Two contrasting situations, with a long-term,planned decline in hard coal mining employment butmuch more rapid contraction of employment in thecountry’s eastern lignite mines. Government at all levelshas promoted a ‘socially acceptable’ approach to mineclosures and the impact on mining communities;

● The Netherlands: Having closed its mines in the early1970s, the Netherlands provides an insight into thelong-term social and economic effects of coal industryrestructuring;

● Spain: A situation in which consideration of the socialconsequences on geographically isolated communitieshas meant that high-cost support measures have beenpreferred over a more radical restructuring of the hardcoal industry; and

● The United Kingdom: Massive short-term restructuringbrought significant social and economic problems toformer coalfield communities within which alternativeemployment opportunities were limited. Centralgovernment has subsequently attempted to redress someof the shortcomings of earlier programmes.

1.6 Acknowledgements

In addition to acknowledging the authors of material includedin the References at the end of this report, special thanks forassistance in its preparation are owed to:● Mr Pierre Berte, Charbonnages de France, Paris;● Mr Theo Delvoie, Begeleidingsdienst Limburgs

Mijngebied, Genk;● Mr Julio Gavito, HUNOSA, Oviedo;● Dr Dirk Grabowski, Bundesministerium für Wirtschaft

und Technologie, Berlin;● International Mining Consultants Ltd;● Mr Rob van de Kraats, HP Projektpromotie, Maastricht;● Mr David Parry, Coalfield Communities Campaign,

Barnsley;● Mr Gerhard Semrau, Gesamtverband des deutschen

Steinkohlenbergbaus, Essen;● Dr Wim Vermeulen, ETIL, Maastricht;and to the various other individuals, organisations andgovernment departments that provided information, opinionand advice.

1.7 Definitions

The terms ‘restructuring’, ‘regeneration’ and ‘reconversion’are used in this report. As defined by IMCL (1998),restructuring is taken to mean ‘the process of financialrecovery, reorganisation and reorientation of an industrialsector or enterprise: it aims to reduce costs and redeploycapacity in the short term to enable corporate viability onnormal commercial criteria over the medium term’. In somecases, particularly where there has been heavy pastsubsidisation of output, the only realistic outcome ofrestructuring is complete closure. Regeneration refers to the

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Introduction

processes involved in the economic renewal of areas,particularly those affected by the loss of jobs through therestructuring or closure of former employers. Reconversion –a term used mainly in continental Europe – ‘applies to thespatial and structural aspects of the economy: it aims atadapting an area to existing and future economic forces, sothat over the long term, the inhabitants and communities canexpect lasting and equitably distributed job opportunities’.

2 The restructuring of the Western European coal sector


This chapter looks at the economic and political backgroundto the decline of coal mining in the 20th Century in the sixWestern European countries under review. It outlines theimplications of this restructuring in terms of employment,and considers the ways in which assistance can be providedto the affected regions to speed economic regeneration. Italso looks at the major role played by the EuropeanCommunity in providing assistance to the hard coal industryand to those areas affected by coal industry restructuring.Finally, the chapter describes the valuable contribution madeby organisations representing coalfield communities, both atthe national and pan-European levels.

2.1 The changing energy scene

From its pre-eminent position as the world’s largest supplierand exporter of coal at the beginning of the 20th Century, bythe end of the 1990s Western Europe had become one of themajor hard coal importers. Lignite production, which soaredduring the period 1950-1990, with Germany as the principalproducer, fell back markedly once German reunification hadreduced the reliance of former East Germany on itsindigenous lignite resources. Factors that contributed to thedecrease in demand for domestically produced hard coalincluded:● its replacement by natural gas from the North Sea fields;● increasing nuclear electricity generating capacity

between the 1950s and the 1980s;● the changed energy security situation that resulted from

the ending of the ‘Cold War’; and● in some instances, considerations of a purely party

political nature.

However, the ‘killer blow’ so far as most Western Europeancoalfields were concerned has been the high cost ofproduction in comparison to the price of hard coal importedfrom countries such as Australia, Colombia and South Africa.With newly deregulated electricity utilities striving to cut fuelcosts in an increasingly competitive marketplace, and theending of government-directed agreements on their supply ofcoal from domestic sources, few utilities are now in aposition to pay the prices needed to maintain the residualWestern European hard coal industry as anything other than asupplier of last resort. Up to now, the position in lignitemining has been somewhat different, in that the integratedproduction and generating units found in western Germanyfunction cost-effectively; the loss of demand and, hence,employment, has fallen predominantly on the less efficientoperations of former East Germany. Nonetheless, greaterderegulation in the German electricity supply industry as awhole is already having an effect on lignite producers’corporate strategies, with the potential for renewedjob-shedding as lignite production costs come underincreasing pressure.

It is important to remember that the decline in Western

European coal mining is not a recent phenomenon. While thecoal industry was perceived to be one of the principalfoundations of post-Second World War industrial andeconomic reconstruction during the 1950s, the expression‘a crisis in the coal industry’ was already in common usewithin a decade. The role of the European Coal and SteelCommunity, which is discussed later in this chapter, changedaround this time, with the emphasis much more on crisismanagement within the industry than had been envisaged atthe time of its creation. The view that the critical period forWestern European coal occurred in the 1980s and 1990s isnot, in reality, a true reflection of a much longer-termsituation, although recent events have undoubtedly colouredgeneral perceptions of this.

2.2 Responses to changing coaldemand

The way in which coal industry restructuring in each of thesix countries studied here has been handled resulted from thedifferent approaches adopted by national governments to thesingle over-riding problem facing the industry: highproduction costs coupled with falling domestic demand. Thesituation for eastern Germany’s lignite producers wassomewhat different, in that the sudden drop in demandcoincided with the general transition from central planning toa market-driven economy. The following sections look ateach of the countries in overview, with more specificinformation being included in each of the country chapters ofthis report. The locations of the principal hard coalfields innorthwestern Europe – including those in Germany, theNetherlands, Belgium and northern France – are shown inFigure 2.

2.2.1 Belgium

The decline of hard coal production in Belgium resulted fromtwo principal factors: the country’s increasing reliance onnuclear power, and deteriorating deep mining conditions thatincurred high costs relative to those of imported coal. Coalproduction was centred on two districts in Belgium: thesouthern coalfield that stretches from the towns of Mons andCharleroi to Liège, representing a continuation of theNord-Pas de Calais coalfield in France, and the Limburg(Kempen) coalfield in the northeast. The Belgian Governmentnationalised the industry in 1967, the last southern mineclosed in 1984, and deep mining ceased in Limburg in 1992(Franz, 1994; MAR, 1985; Goossens and Rombouts, 1993).

In 1984, the national government devolved to the regionsresponsibility for the provision of state subsidies to the coaland other heavy industries, a move that prompted theFlanders government, within whose jurisdiction the Kempencoalfield lies, to accelerate the run-down of the remainingmines on account of the costs involved in continuing

subsidisation. In 1986, the government commissioned a studyinto a structured closure programme for the deep mineindustry. The ‘Future Contact’ for Limburg, which came intoeffect in 1987, covered the ten-year period to 1996 andaddressed not only the mine closures, but also the widerrequirements of social and economic regeneration in theregion.

Employment in the coal industry fell sharply in the 15-yearperiod from 1960 to 1975, from 85,000 to 21,000. There wasthen a period of relatively stable employment, before the finalrun-down of the industry in the late 1980s. Even in 1985, theindustry provided employment for 19,000, but this had fallento 6000 by 1990, when only two mines remained at work(Daniel and Jameson, 1992; MAR, 1990).

2.2.2 France

The French coal industry was nationalised in 1946 under theumbrella of Charbonnages de France (CdF). Demand for coalgradually diminished from the late 1950s, once the initialphase of post-Second World War industrial reconstructionhad been completed, and during the second half of the 20thCentury France became increasingly reliant on nuclearenergy for its electricity supplies. By 1987, nucleargeneration accounted for nearly three-quarters of all Frenchelectricity supply, with demand for coal from the steel andother industrial sectors also reducing rapidly (MAR, 1988).

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The restructuring of the Western European coal sector

By 1980, however, the French government had alreadydecided in principle to reduce national reliance on coal.Production ended in the Nord-Pas de Calais field in 1990,after 270 years, there has been a staged reduction in miningin the Centre-Midi (southern) fields since then, and deepmining is scheduled to cease in the Lorraine field in 2005.

As demand for coal fell, so did employment, from around220,000 in 1960 to fewer than 25,000 by 1991. By 2000,total CdF employment, including its corporate offices andemployees seconded to Electricité de France at powerstations, was just over 12,100. In 1994, CdF signed a‘national coal pact’ with the mining industry unions that set atimetable for the final closure of deep mining whileguaranteeing the future for its employees (CdF, 2000b).

2.2.3 Germany

Amongst Western European countries, Germany is unique inthe abundance of its hard coal and lignite resources. Bothsectors faced major economic and social impacts during thelate 20th Century, albeit for different reasons.

Between the end of the Second World War and 1990, the twohalves of Germany followed fundamentally different politicaland economic paths. In the Federal Republic (WestGermany), concerns of security of energy supplies in the faceof the perceived threat from the Eastern Bloc ensured that

THE NETHERLANDS

BELGUIM

GERMANY

LUX'G

Rotterdam

Eindhoven

Antwerp

BrusselsMaastricht

CharleroiValenciennes

Liège

Paris

Metz

Lille

Saabrucken

Essen

Aachen

Köln

Düsseldorf

Aachen

Ruhr

Saar

Lorraine

Nord-Pas de Calais

FRANCE

Wallonia

GenkKempen

0 50 km

Figure 2 Major hard coalfield areas in northwestern Europe

hard coal production was given high priority, although at asubstantial economic cost. In the Democratic Republic (EastGermany) meanwhile, early dependence on oil supplied bythe Soviet Union was replaced by increasing reliance ondomestic lignite resources, especially once Soviet oilshipments began to dwindle after the late 1970s (Hauk,1981).

Despite receiving massive amounts of subsidisation, much ofthe German hard coal mining industry has always remainedin the private sector. The amalgamation in 1968-69 of 29individual companies into Ruhrkohle AG (later RAG), asubsidiary of a group of electricity utilities and steelmakers,provided a corporate vehicle through which restructuring anddiversification could be carried out, and the administration ofall hard coal operations in Germany was transferred to anRAG subsidiary, Deutsche Steinkohle AG (DSK), at the endof 1998. Employment in German hard coal mining fell from600,000 in the mid-1950s to fewer than 60,000 by 2000, witha further reduction to 36,000 scheduled as output is cut backfurther by 2005.

By contrast, the western German lignite mining industry hasnever required subsidisation. The principal operator,Rheinbraun AG (now RWE Rheinraun AG), was formed in1959 and is a subsidiary of the RWE energy group. Whilesome contraction in the industry’s output and employmenthas occurred, mainly as a result of the closure of smallerdeposits in other parts of western Germany, employmentlosses were minimal in comparison to those suffered by thehard coal sector. Former East Germany, however, relied onlignite for some 70% of its energy needs, and the rapideconomic changes that occurred following Germanreunification in 1990 had a major impact on lignite demand.Privatisation of the former kombinats (industrial enterprises)that had been responsible for East German lignite productioninvolved both the divestment of non-core businesses andsubstantial job losses. Nominal employment in the easternGerman lignite industry fell from 139,000 to around 10,000during the 1990s, although by no means all of these peopleentered the jobs market and considerable numbers becameunemployed.

2.2.4 The Netherlands

The decline in Dutch coal production was a direct result ofthe government’s deliberate policy to replace coal by naturalgas from both on-shore and offshore fields. Natural gas wasdiscovered on-shore in the Netherlands before the majordiscoveries in the southern North Sea, and by the mid-1960swas already a significant contributor to both domestic energyneeds and to exports. With energy resources assured, and thecoal industry in part-state, part-private ownership, there wasconsiderable incentive for the government to reduce thecountry’s dependence on subsidised domestic coal as a matterof urgency.

Dutch coal mining was centred on the Limburg district in thesoutheast of the country, adjoining the Kempen coalfield innortheastern Belgium and the Aachen field in Germany.Production ceased completely at the end of 1974, the



management of the Dutch State Mines having decided in1967 to accelerate the closure of the state-run sector of theindustry ‘to ensure that labour from the mining industry willbe better suited to the demands of the new industries beingdeveloped for alternative employment’ (MAR, 1968).

In 1969, the government set out its policy for the finalclosure of the Limburg mines, and for re-industrialisation inthe province. With a target date of 1975, this was based onthe experience gained in the period 1965-1969, when ‘theclosure programme was put into effect much faster thananticipated, as it was found that the provision of alternativework for employees could take place more quickly thanexpected’ (MAR, 1970). Employment stood at 45,000 in1965, by early 1971 this had reduced to 13,000, and directmining industry employment ended with the closure of thelast two mines at the end of 1974.

2.2.5 Spain

Although never a hard coal producer on the same scale asGermany or the UK, Spain has retained a small core ofextremely high-cost production in both the state and privatesectors. Government policy during the period between themid-1930s and the mid-1970s involved substantial stateparticipation in major industrial sectors, including coalmining. State involvement came with the formation of Cia.Hulleras del Norte SA (HUNOSA) in 1967 through theamalgamation of a number of bankrupt private-sectorcompanies. Following the country’s return to multi-partypolitics and its admission to membership of the EuropeanUnion, Spain’s energy policy has shifted towards greaterreliance on imported fuels.

Successive national energy plans have resulted in a gradualreduction both in coal output and in employment, although astrong protectionist influence remains, particularly at regionalgovernment level. There is also strong support from themining trades unions for continued employment in coalmining, given the lack of other job opportunities in the areasmost affected. The most recent national coal plan, agreed in1997, covers production and employment up to 2005, andcontains the requirement for coal mining companies toreplace at least a proportion of the jobs lost during the periodwith other work (A Gonzales, 2000).

Employment in the hard coal sector has fallen gradually,HUNOSA’s work force having been cut from a peak of26,600 in the late 1960s to 7500. Throughout Spain as awhole, coal industry employment halved from 36,000 to18,000 between 1980 and 2000 (IMCL, 1998).

2.2.6 The United Kingdom

The British coal industry was nationalised in 1947, at whichtime coal was the country’s major energy resource.Nonetheless, a consistent policy of mine closures beganalmost immediately and continued through the 1950s, 1960sand 1970s, largely in response to falling demand for coal onthe domestic market. Export demand was also substantially

reduced from pre-Second World War levels. The availabilityof cheap oil, the development of nuclear electricitygenerating capacity and the discovery of both natural gas andoil in the British sector of the North Sea sequentially affectedthe requirement for coal during this period.

Government policy towards the coal industry during theperiod 1979-1997 focused on privatisation, the elimination ofsubsidies and a reduction in the influence of the industry’strades unions. The cost differential between domesticproduction coal and imported coal at the beginning of thisperiod weighed heavily in favour of imports, initially forcoking coal and later for power station fuel, although therestructuring of the industry through the closure of lesseconomic capacity created a small residual core that did notrequire direct subsidisation. The privatisation of theelectricity supply industry also removed the price protectionthat had benefited coal production for this market.

Between 1947 and 1980, coal industry employment fell from718,000 to 290,000, and then to 13,000 by 1994 when theremaining operations were returned to private-sectorownership. Since then, employment has fallen further assome operators have ceased trading and competition fromsteam coal imports has continued to take market share fromdomestic producers.

2.3 The role of the European Union

The European Union (EU) has played a major role in therestructuring of the Western European coal industry over thepast 50 years, both directly through the European Coal andSteel Community (ECSC) and indirectly through supportfrom its regional structural funds for areas of Europe that areeither economically depressed or are lagging behind theremainder of the Community for one reason or another. It isprobably fair to say that without the EU’s resources –currently and in its previous form as the European EconomicCommunity (EEC) – the level of success achieved in theeconomic regeneration of former coal-mining areasthroughout the Community would have been much lower.This is important to remember in the context of other parts ofthe world that may wish to restructure their own coalindustries but which do not have the economic support of thistype of cooperative organisation to call upon.

Through its executive, the European Commission (EC), theEU also has a major impact on the day-to-day administrationof coal industry in its member states. Thus, for example,compliance is required with EC directives on the nature, leveland duration of support that national governments canprovide to their coal sectors, on environmental matters, andin terms of competition policy with, in the case ofsubsidisation, EC approval being required on an annual basis.

2.4 Assistance to areas affected bycoal industry restructuring

Assistance for the economic regeneration of areas affected bycoal industry restructuring or closure is typically derived



from two sources: national and European Union. In the lattercase, there is often a requirement for ‘co-financing’ – wherenational governments have to match the EU’s contributionsfor specific regions or projects. In the past, this has proved tobe difficult to administer in some circumstances, with theresult that a lack of co-financing has meant that available EUfunding could not be applied as intended. An example can beseen from the UK, where in the 1980s and early 1990s,national government spending constraints on local municipalauthorities resulted in EU funding for coal-mining areaseffectively being blocked.

Areas affected by long-term industrial decline require supportin a number of ways, not just in helping those whose jobshave been lost to find alternative work. Unlike modernmetal-mining projects, in which site restoration is usuallyrequired under the terms of production licencing agreements,the scale of the industrial legacy in former coal, steel orshipbuilding areas is such that it is often beyond thecapabilities of the companies involved to carry out anythingbut the most basic remedial work. This is particularly truewhere the restructuring involves industries that have beenunder long-term state control. Thus there is usually a pressingneed for environmental improvement and infrastructuredevelopment in addition to addressing the very real socialimpacts caused by the loss of a principal employer.

Neither is it sufficient to look only to the needs of thecurrently existing communities that have been affected. Theclosure of traditional employers means that the nextworkforce generation will also require an alternative, or willbe faced with the prospect of out-migration from thecommunity in order to find work elsewhere. Serviceproviders may need help in the form of relief from businesstaxes, for example, to enable them to continue until the localeconomy is restored, the risk being that the closure of basicservices such as shops and community facilities for lack ofsupport will cause further rapid decline within thecommunity itself.

It is important to realise that it is very difficult to estimateaccurately the impact of individual policies, programmes ororganisations on employment within any given area. This isespecially true in relation to job creation. As Fothergill andGuy (1994) note: ‘estimates of job creation that take noaccount of deadweight and displacement (and, whereappropriate, multiplier effects) cannot be regarded as areliable guide to the impact on a local economy. But neitherdeadweight nor displacement is easy to estimate’. In thiscontext, the term ‘deadweight’ refers to jobs that would haveexisted anyway, so that financial incentives such asgovernment grants merely assist companies to offer jobs,rather than actually creating these jobs. ‘Displacement’occurs where the expansion of one company takes businessaway from another. This is, of course, of particular concernwhere this occurs within a locality, such as a coalfieldcommunity, in that the net impact of any job creation may, infact, be zero.

2.4.1 National assistance

The way in which central government funding is provided tospecific areas affected by industrial decline depends largelyon the structure of government in each individual country.Thus, for example, Belgium, Germany and Spain have astrong level of regional government that is not present in theUK where, as in France, there is a tradition of centralisedcontrol of spending. Problems can occur in both cases wherethere are different political aspirations at the central and localgovernment level, as in Spain (central and provincialgovernments) or the UK (central government andmunicipalities).

Programmes aimed at assisting economic regeneration andthe attraction of alternative employment at the national levelusually consist of measures such as the availability of grantsor soft loans, improvements to the physical andcommunications infrastructure, fiscal incentives such ascorporate tax deferral, the provision of land for industrialdevelopment and of industrial premises such as workshopsfor small businesses, enhanced training facilities, and theavailability of business and management advice toprospective employers. They can be applied individually, oras components of a larger package of regeneration measures.In some cases, as in ‘The Valleys Project’ (aimed at the SouthWales coalfield in the UK) or ‘The Future Contract’(covering the Limburg coalfield in Belgium), the concept issuch that a full-time administration is also required. In others,administrative responsibility is given to existing regional orlocal authorities.

2.4.2 European Union assistance

EU assistance is derived from two principal sources, theECSC and the European Structural Funds. Founded in 1952,the ECSC was one of the ‘building blocks’ that formed thefoundations for the current European Union, and the coal andsteel industries thus featured prominently in EC financial andstructural planning during the latter half of the 20th Century.

The ECSC was created with the primary aim of regulatingwhat in the 1950s were thriving coal and steel industries inBelgium, France, Germany, Italy, Luxembourg and theNetherlands. Membership of the ECSC was later extended toall European Union member countries. By the late 1950s,with oversupply of European-produced coal and the adoptionof other energy sources, the role of the ECSC changed, withgreater emphasis being placed on overcoming the socialimpact of the deepening crisis in both industrial sectors.According to Franz (1994), readaption aid provisions underthe ECSC treaty had the following aims:● to gain acceptance for essential industrial restructuring

by those people affected;● to reduce the number of employees;● to guarantee social protection measures for affected

workers; and● to provide new employment in other companies.

Article 56 of the ECSC treaty formed the sole legal basis forapplying readaption aid until 1989. Assistance provided



under these auspices was additional to national programmes,which had to fund at least 50% of the total amount allocated.It was also considered complementary to other aid obtainedfrom European Community sources, such as the regionalstructural funds. Under agreements reached between EUmember governments in 1989, ECSC aid can be provided tocover five standard situations: early retirement,unemployment, internal redeployment, external redeploymentand vocational training (Franz, 1994). In 1993, the EuropeanCommission issued new guidelines covering the criteriaunder which ECSC assistance could be granted for the periodbetween 1994 and the termination of the ECSC treaty in2002. These circumstances, for which European Commissionapproval has to be obtained annually by the countryconcerned, cover:● operating aid (production subsidies) under certain

conditions;● assistance for coal producers that are cutting back their

activities;● assistance to cover exceptional costs, such as where

producers are faced with temporarily adverse marketconditions;

● funding for research and development; and● funding for environmental protection (EU, 1993).

The bulk of EU structural fund aid is directed at areas whereeconomic development has been slower than elsewhere in theCommunity, and those areas affected by industrial decline.Objective 1 areas – defined as regions in which per capitaGDP is at least 25% less than the EU average – include somemining regions in Spain, eastern Germany and northernFrance. Objective 2 areas – where a substantial proportion ofthe labour force is affected by the decline of major primaryindustries – encompass most coalfield areas in Belgium,France, the UK and western Germany. EU structural fundsused in this context comprise the European RegionalDevelopment Fund and, to a lesser extent, the EuropeanSocial Fund. During the period 1994-1999 these structuralfunds, totalling ECU141,000 million (US$133,000 million atearly 2001 exchange rates), accounted for one-third of theEuropean Union’s budget (EUR-ACOM, nd).

Other EU funds that have been targeted specifically at formercoal mining districts have included the RECHARprogramme, which ran from 1990 to 1999. Comparable toother EU programmes aimed at areas affected by the declinein traditional industries, RECHAR was initiated as a responseto the very real and individual problems facing former coalmining areas, and was intended to provide assistance withenvironmental restoration, promoting new economic activityand developing the potential of the workforce. Areas eligiblefor RECHAR assistance had to satisfy several criteria inrelation to the decline in the local coal industry and the lossof mining jobs, with aid being targeted at:● environmental improvement;● promoting infrastructure development;● constructing industrial areas and factory units;● promoting new small- and medium-scale enterprises;● supporting tourism, especially in the industrial heritage

context;● promoting regional development agencies; and● training (EU, 1994).

The RECHAR programme drew its funding from the EU’sregional and social funds, from the ECSC and from theEuropean Investment Bank (Franz, 1994). The initialRECHAR programme had a budget of some US$480 million,to which were added around US$800 million in soft loanfacilities (CCC, nda). RECHAR II, which ran from 1994 to1999, had a budget of US$455 million (EC, 1999).

2.5 Coalfield Communities

A significant feature of the period of coal sector restructuringthat has taken place throughout Western Europe during thepast 20 years has been the emergency of a pan-Europeanvoice for the communities affected by the changes. Nationalorganisations, such as the UK’s Coalfield CommunitiesCampaign, ZAK in Germany and ACOM in Belgium, France,Italy and Spain, represent the interests of the local authoritieswithin whose jurisdictions coal industry restructuring hastaken place. The umbrella organisation, EUR-ACOM,provides a means for these national bodies to share interestsand concerns at the European level (EUR-ACOM, nd).

These organisations appear to have achieved considerablesuccess in a number of areas, nationally in terms of theeffective lobbying of central and regional governments formore assistance for former coal-mining areas, andinternationally with the European Commission (EC). Forexample, credit for the establishment of the RECHARprogramme can given to EUR-ACOM through its pressure onthe EC for additional targeted funding for these areas.Although the Western European coal industry is now afraction of its former size, the local authorities that make upthe membership of these community organisations are stillfaced with very real problems of unemployment, physicalisolation, poor infrastructure, dereliction and environmentaldecay, aspects of daily life that require continued lobbying toensure that governments maintain their priorities and carryout their commitments to fund improvements. In this aspect,EUR-ACOM and its members have provided a valuableservice to their constituents (CCC, ndb).



33 Belgium


Coal production in Belgium was centred on two specificregions – the older Wallonia coalfields in the south and eastof the country, where industrial-scale production began in the19th Century, and the Limburg (Kempen) coalfield innorthwest Flanders (see Figure 2). Production began hereafter 1914, the coal resources extending through DutchLimburg into Belgium from the Aachen coalfield in Germany(Verbrugghe, 1994). All of the output was from deep mines;surface operations, which developed during the 1980s andstill continue, have been based exclusively on the recovery ofcoal from old deep-mine waste tips.

Belgian production reached a maximum of 30 Mt/y in theearly 1950s, but then declined as mining conditions becameincreasingly difficult. Production in 1960 was 22 Mt, but by1980 it had fallen to around 6 Mt, the bulk of which camefrom the Limburg coalfield (Daniel and Jameson, 1992).Production and employment trends since the 1970s are shownin Figures 3 and 4.

The Belgian deep coal mining industry was unusual in theEuropean context in its level of reliance on foreign workers.For example, when the last southern coalfield mine, Roton,closed in 1984, 85% of its 931 workforce were of Turkish,Moroccan or Italian origin. At that time, the Limburg mines’workforce was made up of Belgians (55%), Turks (25%) andthe remainder from other countries of origin (MAR, 1983;MAR, 1985).

This chapter reviews the closure procedures that were applied

to the coal mining industry in the province of Limburg. Lyingnext to the Dutch province of the same name, BelgianLimburg is a constituent part of Flanders, one of the tworegions (plus Brussels) that comprise federal Belgium. By theearly 1990s, the province had a population of around750,000, three times that in the pre-First World War periodbefore coal mining began on an industrial scale. A majorreconversion process was put into place and its regeneratedindustrial base is now benefiting strongly from Limburg’scentral location within Western Europe.

The results achieved in the first stages of the reconversionprogramme (1987-1991) were reviewed and analysed in 1994by the Hoger Instituut voor de Arbeid (HIVA – HigherInstitute of Labour Studies) at Leuven Catholic University. Itsreport, prepared for the European Commission and theFlanders government, appears to be the only such publishedreview of the Limburg programme (HIVA, 1994), and whilethis forms a foundation for an appraisal of the project,follow-up studies have yet to be undertaken in order to assessits longer-term achievements.

3.1 Background to closure

By the 1960s, all coal and steel production in Belgium was inthe hands of the major private-sector holding company,Société Génerale, through a number of operating subsidiaries.Coal from the company’s mines was used in bothsteel-production and power generation, with the focus ofproduction gradually moving from the older, southern minesto the Limburg district. Changing economics resulted in thedecision by Société Génerale to withdraw from coalproduction, a move that precipitated the Belgian governmentof the day into nationalising the remaining mines in 1967 inan effort to maintain national energy sources and, more

8

6

4

2

0

1995

Year

Out

put

(M

t)

10

12

19901985198019751970

KS Mines(Limburg)

Belgium total

Figure 3 Coal production in Belgium, 1970-1995

1995

Year

19901985198019751970

Em

plo

ymen

t ('0

00)

10

5

0

15

20

Figure 4 Employment in the Belgian coal industry,1970-1995

importantly, to remove any target for social unrest. Pitclosures in 1964 and 1966 had resulted in the development ofserious social tensions, such that military intervention hadbeen necessary and fatalities had occurred.

By 1980, the Limburg coalfield accounted for all but300,000 t of Belgian output. The one remaining deep mine inWallonia closed in September 1984, leaving six collieriesactive in Limburg under the control of the state company,Kempen Steenkoolmijnen (KS). However, with productioncosts of BFr4,475/t (equivalent to those incurred in Germandeep mines in the mid-1980s), KS’s operations weremarkedly uncompetitive with imported coal at aroundUS$35/t (BFr1,400/t). Indeed, between 1987 and 1990,production costs in the remaining operations doubled to overUS$250/t, with subsidies of around US$100/t only meetingpart of the shortfall (Daniel and Jameson, 1992). In the early1980s, subsidisation of the Limburg coal industry was costingthe national government BFr8,000 million (US$200 million)annually, while between 1965 and 1985, state aid to theLimburg mines totalled some BFr100 billion (MAR, 1985).

Direct employment at KS in the early 1980s was 19,000people, set within the context of wider economic depressionin the province of Limburg, in which unemployment wasthen running at around 25% (MAR, 1984). For comparison,this was markedly higher than the unemployment rate thenprevalent in the rest of Flanders (15%), and had come aboutdespite earlier successes in creating new jobs in the province.Of particular concern was the high level of unemploymentamongst young people, many of whom were the children ofimmigrants, and amongst women.

Since 1982, Belgium has had a federal constitution; beneaththe national government, there are autonomous regionaladministrations for Wallonia, Flanders and Brussels. In 1984,the Belgian national government passed responsibility forsubsidisation of the coal industry to the Flanders regionalauthorities as part of its devolution programme. KS’s initialplans to close one mine by 1987 and lay off 4,000 minersresulted in a one-day industry-wide strike in Limburg inOctober 1984, causing the company to shelve the scheme.

The company’s second attempt at devising a restructuringplan that was acceptable to all the parties involved, tabled inlate 1985, also met with strong opposition. A year later, facedwith the potential for ever-greater subsidisation at a timewhen energy supplies appeared to becoming increasinglysecure, the Flanders government took the decision to closethe Limburg coal industry permanently. In conjunction withthis, it put into place a plan (the Future Contract) for theregeneration of Limburg’s industrial base as a means, notonly of replacing jobs lost from coal mining, but also ofproviding longer-term economic stability for the province(Donckier, 1991).

The problems facing the Flanders government in themid-1980s were three-fold:● to offset the social and economic effects of the mine

closure programme and to bring down high structuralunemployment. This had evolved in the Limburg regionas a result of economic and population trends falling out


Belgium

of step with each other, resulting in an unbalanced labourmarket;

● to restructure KS and to find new job opportunities forits 17,000 employees; and

● to diversify the regional economy from domination by asingle industry (coal mining) to a multi-sectoral basis.

These targets were tackled concurrently with programmesaimed at improving the integration of the large immigrantcommunities in Limburg. Immigration into the regionoccurred in three distinct phases; people from countries suchas Poland, Hungary and Ukraine arrived during the 1920s and1930s; there was immigration from Italy in the immediatepost-Second World War period of the 1940s; and the mostrecent, and least assimilated, groups came from Turkey andMorocco in the 1970s and 1980s. While the earliercommunities have largely entered fully into Limburg society,the Turkish and Moroccan groups remain in need ofadditional assistance and, as will be shown later, weregenerally less successful in finding new employment after thecoal industry closed.

3.2 Social impact

Employment in the Belgian mining industry had alreadyhalved from 38,000 in 1960 to around 19,000 in 1984, whenrestructuring of KS was first discussed. By the time the actualclosure programme was put into place, KS still employed17,000 people, of whom 7700 worked in the eastern pits,destined for first-stage closure, and 9300 in the company’swestern operations. Employees were given a definite targetdate by which to accept the terms offered: retirement forthose eligible, leaving the industry with a redundancy bonusof BFr800,000 (net) for those who wanted to find alternativework, or to move from the eastern to the western mines andremain with KS. The Gheyselinck plan envisaged that aminimum of 8500 miners would have to leave the industry in

Table 2 Employment options taken by minersduring the closure of KS's easternmines (Donckier, 1991)

Option Eastern Westernmines mines

Retirement pension 235 171Early retirement 1181 836Early retirement during the 299 221restructuring period

Invalidity benefit 547 541

Sub-total, retirement 2262 1769

Took lump-sum and left KS 3787 945Took lump-sum after reaching 943 9010 years' seniority

Sub-total, redundancy 4738 1035

Moved to KS West 741 21

Totals 7733 2825

the first phase for it to be successful; in point of fact, over10,000 chose to leave, including more than 1500 from thewestern pits. The breakdown of the number selecting eachoption is shown in Table 2.

The closure of the three eastern mines took place during 1987and 1988, and by 1989, KS’s employment had reduced to6,000 people. The second phase of the closure programmewas completed in October 1992.

3.3 The Future Contract

The Future Contract encompassed three primary objectives:● to stimulate employment in Limburg such that its

unemployment rate could be reduced to the average forFlanders as a whole;

● to improve the level of education in Limburg to the samestandard as in the rest of Flanders; and

● to put into place special initiatives in the former miningtowns in Limburg.

The closure concept for the Limburg coal sector revolvedaround two fundamental principles:● the closure would be handled by an appointed manager;

and● no miners would be forced to accept redundancy against

their wishes.

The project manager, who was brought in from the oilindustry in mid-1986, presented his plan (the Gheyselinckplan) for the phased closure of KS’s operations at the end ofthe year. Critical to the undertaking was the Flandersgovernment’s commitment to provide from various sourcesBFr100,000 million (then US$2,500 million) over a ten-yearperiod to cover the costs of closure of the mines, with thepromise that any funds remaining could be used for the widerregeneration of Limburg’s industry. The cost of theprogramme was comparable to the amount that thegovernment would have had to pay in subsidies over theperiod had the mines remained in operation (McAvan, 1993).The entire concept, encompassed by the GeïntegreeredActieprogramma Limburg (Limburg Integrated Action Plan),was approved by all of the parties involved – the national andregional governments, the provincial executive administrationand the European Commission, as well as the miners’ unionsand other interest groups – in early 1987, with the officialsigning of the ‘Limburg Future Contract’ taking place inApril 1987.

The funding provided by the Flanders government covered atwo-stage closure programme, with BFr28,000 million beingallocated to the closure of the two remaining mines at Genk,and BFr72,000 million for the two western operations. Thefunds were targeted in a three-way split:● to cover future operational losses;● to provide for redundancy and other social costs; and● to fund reconversion initiatives.

There was thus a strong incentive for rapid closure, so thatmoney saved by removing future losses could be re-allocatedto the other investment centres. Government funding was


Belgium

placed into a regional development fund, with additionalfinancial support also provided for the Flemish Manpowerand Vocational Training Service (VDAB).

Significantly, the Future Contract came into being at a timewhen other organisations were already investigating theopportunities for economic regeneration in Limburg.According to Donckier (1991), ‘the municipal ContactgroepWerkgelegenheid Genk (Contact Goup for Employment inGenk) [formed in 1984] organised symposia on reconversionand new investment. New organisations such as LimburgseEconomische Activering (Limburg Economic Activation)(1984) and Strategische Plan Limburg (Limburg StrategicPlan) (1985) were devoting themselves to a differentapproach to the problems Limburg had to face’.

By its formal nature, the Future Contract committed all of theparties involved to achieving the employment and investmentobjectives set out in it. Despite the much faster closure of thecoal industry than had been originally envisaged, planningmeetings continued right though until the end of the ten-yearFuture Contract period in 1997.

3.4 Organisations involved

Implementation of the various aspects of regionalregeneration included in the Future Contract required theestablishment of a comprehensive administrative structure, atthe head of which was the Permanente Werkgroep Limburg(Permanent Working Group for Limburg), headed by a seniorofficial from the Flanders government and a permanentmanager. The Permanent Working Group held overallresponsibility for preparing specific projects and carryingthem out once approval had been given by the Flandersgovernment.

The Permanent Working Group received advice from anumber of other organisations, including the GuidanceCommittee for the European Coal and Steel Community(ECSC). This was tasked with coordinating retrainingprogrammes that were implemented by the FlemishManpower and Vocational Training Service (VDAB) and byBegeleidingsdienst Limburgs Mijngebied (BLM – theLimburg Mining Region Advisory Service), which wasestablished specifically to address the requirements ofex-miners seeking to re-enter the employment market. Themain role of the BLM, to provide guidance to the long-termunemployed in finding new job opportunities, often involvedextensive retraining or additional vocational training, andrequired close liaison between it and the VDAB (Donckier,1991).

Administration of investment aspects of the Future Contractwas assigned to Limburgse Inverteringsmaatschappij (LIM –the Limburg Investment Company), which was created with acapital of BFr5,000 million (US$125 million). The role of theLIM was to provide seed capital for new employmentopportunities in Limburg, both in enterprises new to theprovince and in expansions to existing businesses.

Socially orientated financial aspects became the

responsibility of the Social Investment Company for Limburg(SIM), which the government established to act as a catalystfor social regeneration in the province. Its resources, totallingsome BFr3,000 million (US$75 million), were directed atprogrammes aimed at achieving better integration ofLimburg’s large immigrant populations, vocational training,social housing, welfare and education.

The three agencies established as the key actors responsiblefor implementing the aims of the Future Contract, LIM, SIMand BLM, did not function in insolation, but had to liaisewith other Belgian, regional and provincial organisations, aswell as with the European Commission.

3.5 European Communityinvolvement

A key feature of the Future Contract was the participation ofa number of European Community funding sources.European Commission approval for the Integrated ActionPlan for Limburg in mid-1988 brought funding from,amongst others:● The European Coal and Steel Community (ECSC);● The European Regional Development Fund;● The European Social Fund;● The European Agricultural Fund;● RECHAR and other industry-specific initiatives; and● The European Investment Bank.

Overall, around one-half of the total US$2,500 millionfunding for the industrial regeneration of Limburg came fromEuropean Community sources, in particular the EuropeanRegional Development Fund, under which the province wasgiven Objective 1, 2 and 3 status at different times during the1980s and 1990s. The RECHAR programme – targeted atinfrastructure improvements – was locally perceived as beingof particular significance, and accounted for 20–25% of thetotal EC funding. The ability of the region to attract this levelof funding and co-financing to permit its full application isseen as being a major success that can be attributed to theemployment of a number of specialists in the complex area ofEuropean Community funding. Such specialists were takenon for the project by the national and Flanders governments,by the Genk local authorities, and by the SIM (Delvoie,2000).

3.6 Employment options

As the first wave of restructuring began, KS employees fromthe company’s eastern operations were given a choice ofeight options covering various forms of pensions, earlyretirement, redundancy with the opportunity to find new workafterwards, and transfer to KS’s western mines. Thoseaffected by the later stage in the programme had similaroptions, albeit without the chance to transfer within thecompany.

Of 7700 employees in the eastern mines, 2260 opted forsome form of pension, 4740 chose redundancy with alump-sum payment of BFr800,000 (net), and barely


Belgium

750 wished to transfer within the company. The variousforms of pension available were:● retirement pension, for those reaching permissible

retirement age before the end of 1987;● immediate early retirement for those with between ten

and 15 years’ service. The pension consisted oftwo-thirds salary for those with ten years’ service, risingto full salary after 15 years’ work;

● early retirement for those who qualified by the end of1989;

● conventional early retirement for those aged over 50 butwithout sufficient employment service to qualify forother forms of early retirement;

● invalidity pension.

In addition, the redundancy package was available eitherimmediately, or deferred for those who had not worked for10 years in the industry. The breakdown of selections isshown in Table 2, which also includes details of choicesmade by western area miners who wished to leave theindustry during the first phase of restructuring.

Of the 5500 affected by the second phase, 3100 opted forretirement while 2300 received redundancy. This left aresidual core of around 100 employees within KS. Table 3shows the relative proportions involved in each decisionsector.

Overall, 42% of KS employees elected to retire on someform of pension, while 58% – including around 900 peoplewho left the industry voluntarily during the closure period –accepted redundancy and the payment of the lump-sumterminal bonus. The proportions accepting pensions variedconsiderably between the two areas, comprising 40% of theeastern area miners but around 80% of those who left theindustry in the second phase. Those who accepted earlyretirement were typically in the age range 40–60, while theofficial retirement age for miners in Belgium had previouslybeen after 20 years’ service underground or 25 years in thecase of surface workers (Delvoie, 2000). The level of early

Table 3 Employment options taken by minersduring the closure of KS' western mines(Donckier, 1991)

Option Number of ex-miners

Retirement pension 24Early retirement 1485Early retirement during the 1454restructuring period

Invalidity benefit 144

Sub-total, retirement 3107

Took lump-sum and left KS 2306

Sub-total, redundancy 2306

Remained with KS 100

Total 5513

retirement pensions, amounting to an average ofBFr48,000/month (net) compares favourably with thecountry’s general unemployment benefit of a maximum ofBFr58,000/month (net) for the first year andBFr32,000/month (net) thereafter.

Before the closure programme was put in place, generalconditions for mining pension eligibility were a minimum of20 years mining work for full pension entitlement, or tenyears mining plus a further 15 years in another occupation.Rights to a mining industry pension were retained even if aneligible ex-miner chose to continue working elsewhere.Attendance at a mining school or in military service countedtowards the ten-year minimum qualifying period for miningindustry pension eligibility, theoretically giving full pensionentitlement from the age of 36 for an underground workerwho had left secondary school at 16. Mining industrypensions were index-linked, and were also typically 20–40%higher than general retirement pension rates, depending onthe age at retirement and the pensioner’s previous salary.

3.7 Training schemes

Both BLM and VDAB were actively involved in retrainingprogrammes for ex-miners, with funding being obtained fromthe ECSC and the RECHAR programme as well as from KS(paid for essentially through state subsidies). The companypaid a retraining bonus of BFr10,000 per month for up to oneyear to every miner who completed a retraining course, andincome support was provided to make up any shortfall inincome at a new job to the equivalent of the former net KSsalary for up to 18 months. VDAB opened a number ofadditional centres at which miners (and others) receivedpredominantly industrial and vocational training to providethem with the new skills appropriate to the alternative workopportunities available.

BLM was established in 1988 at the request of the ECSCsupport committee in response to the perception that acomparatively large minority of the workforce affected by thefirst phase of mine closures – mainly those who had eitherlow educational achievements or were from immigrantgroups – were unable to find new work easily. Academicstudies confirmed that while in total, some 70% of theseex-miners who were in the jobs market had been able to findwork within the region, fewer than 20% of the Turkishpopulation of ex-miners had been able to do so. In addition,while more than 75% of the first-phase job-seekers had beenon some form of training course, this approach had beentaken up by fewer than half the Turkish community.

The following year, BLM’s terms of reference were extendedfrom only providing assistance to the VDAB to the targetingof training and employment assistance for specific groupswithin the unemployed. Within the general community, twosuch groups encompassed the children of immigrant families,and recent arrivals in Belgium who were hindered in theirsearch for employment by poor knowledge of the Flemishlanguage. A third group consisted of the hard core of formerminers who, despite undergoing retraining, were unable tofind alternative work.


Belgium

BLM’s approach was to design training courses specificallyfor the individual, taking into account both the trainee’seducational achievements and practical abilities as well aspotential employers’ requirements. Aside from ex-minersthemselves, the organisation has targeted young people, oftenwith low academic achievements, for whom the miningindustry would formerly have been the employer of choice.As well as providing vocational training for industries suchas construction and metalworking, BLM acted as anintermediary between trainees and potential employers, andprovided follow-up support if the circumstances required it.The organisation also undertook training courses on behalf ofemployers, incorporating hands-on practical experience(working while learning) as an integral part of each trainingprogramme (Franz, 1994).

An important aspect of its operations was to gain theconfidence of the groups that it had been set up specificallyto assist, and for this reason its policy of using liaisonofficers within the community to establish these contacts hasbeen seen as being very successful.

Between 1988 and 2000, BLM and the other training centresassisted a total of around 25,000 people through the provisionof advice, specialised training services and job placement. Ofthis total, around 8000 were ex-miners. During the late1990s, only a small proportion (fewer than 10%) of thosebeing trained were former miners, the focus at this time beingon young people (miners’ children), women and newlyarrived immigrants. By 2000, around 300 ex-minersconstituted a hard core of long-term unemployed; reasonswere varied, but included people with handicaps that weresufficiently severe to make finding work difficult but did notconstitute grounds for state invalidity benefits.

Taking the restructuring programme as a whole, somewhatover half the KS workforce received some form of retraining.In the initial phase of mine closure, however, a significantproportion of miners of Belgian and Italian origin declinedany training but were still able to find new work, believingthat their qualifications were already adequate. Many Turkishminers were also reticent to participate in training, but fordifferent reasons that were often connected with poorFlemish language skills.

3.8 Funding levels

The rapid closure of KS’s operations led to considerablesavings being achieved from the initial budget estimated by theFlanders government under the Gheyselinck plan. However, ofthe BFr50,000 million that was not spent on maintaining coalmining over the full ten-year period originally envisaged by theplan, the Belgian government reclaimed some BFr35,000million, leaving BFr15,000 million to be spent, largely asco-financing, on economic and social regeneration projects inLimburg. The way in which this was done attractedconsiderable criticism, since the original agreement indicatedthat all the funding saved by early closure could be re-targetedat reconversion programmes, not just a part of it.

In total, the cost of the Limburg regeneration programme

between 1987 and 1991 reached BFr52,000 million(US$1300 million), with a further BFr7400 million madeavailable in loans. Of this amount, BFr50,700 million camefrom public resources, with BFr1300 million derived fromthe private sector. European Community fundingcontributions totalled BFr6800 million, plus BFr3000 millionin loans. The split between the various sources of funding forboth social and economic regeneration programmes is shownin Figures 5 and 6.

According to HIVA (1994), BFr19,900 million (US$500million) was spent during this time on income support,BFr19,600 million on direct support to businesses, BFr7,100million on infrastructure and support services, and BFr4,900million on training and advice.

3.9 Chapter discussion andconclusions

The closure of the Limburg coal industry presented the


Belgium

authorities with a rare opportunity to put into place acomprehensive package aimed at the wider regeneration ofthe province’s economy. For the individual miner, the optionswere clear-cut, and the method of closure devised by theproject manager left little opportunity for the serious socialunrest that had greeted earlier restructuring proposals. Anydisquiet that did occur was caused mainly by the variations inconditions offered to the two groups of miners involved inthe different closure phases.

Major benefits were achieved through the coordinatedapproach adopted from the outset, with national, regional andlocal government able to draw effectively on a range offunding sources to provide both direct and co-financing forthe various aspects of the project. The use of people whowere highly skilled in raising funding from European andother sources was also very successful. The part played bythe trades unions in accepting the mine closure programmealso helped to ensure its relatively smooth implementation.

However, there has been criticism over the level ofcoordination between aspects of social and economicpolicies, and in particular the lack of consideration forenvironmental issues; four of the five mine sites remainedderelict in 2000, with planning for their future use onlyhaving begun in the late 1990s. There was also concern overa lack of clear-cut direction and transparency in thedecision-making processes, with the various levels ofgovernment, the Permanent Work Group for Limburg, andKS having different agendas that each tried to follow (HIVA,1994).

The large immigrant population in Limburg providedadditional concerns, especially in relation to the education,training and work prospects for younger people and forwomen. While this was of less initial concern in relation tothe specific needs of former miners from these groups, therehas been a continuing need for support that has extended farbeyond the constraints of the mine closure programme itself.With large amounts of European Community fundingavailable, the training programmes in the first stages of the

BFr52,000 million

BFr50,700 million of public resources

National, Flemish, Provincial and LocalBFr43,900 million

EUBFr6,800

million KSBFr14,600

million

NationalBFr11,700

million

FlemishBFr14,700

million

Provincial and LocalBFr2,900 million

Private sectorBFr1,300 million

Figure 5 Sources of funding used for the Limburgregeneration plan (HIVA, 1994)

BFr52,000 million

Social readaption

BFr25,200 million

Economic readaption

BFr26,800 million

EC Programmes

BFr12,600 million

Independent

BFr12,600 million

EC Programmes

BFr9,000 million

Independent

BFr17,700 million

BFr3,300 million

EC

BFr9,000 million

Co-funding

BFr300 million

Private

BFr3,500 million

EC

BFr4,500 million

Co-funding

BFr1,000 million

Private

Figure 6 The split between social and economic targeting in Belgian Limburg (HIVA, 1994)

project aimed – whether intentionally or not – at ensuringthat as many people as possible received assistance; laterprogrammes have been devised to target more precisely therequirements of both trainees and potential employers.

The need for technical education for young people from allbackgrounds has been highlighted. In the past, this wasalmost exclusively aimed at preparing people for a life in themining industry; today, employers’ requirements are verydifferent, and the topics covered by technical education has toreflect this.

A number of significant conclusions can be drawn from theBelgian experience between the mid-1980s and the late1990s. These include:● the need for effective coordination of a project of this

scale is paramount, since many different interests areinvolved. The likelihood of continuing consensus overtime is, however, remote, given the various political aswell as economic forces that are at work;

● of the 17,000 miners employed by KS in 1986, 7100(42%) opted for some form of pension scheme and 9700(58%) re-entered the labour market;

● the clear tendency was for the most highly skilled miners– such as fitters and electricians – to leave the industryfirst, and to have the greatest success in finding newwork. Younger miners were also amongst the earlyleavers, with the knock-on effect that the residualworkforce contained a greater proportion of older,less-skilled people who either required more help infinding new jobs, or who chose to take early retirement;

● there were marked variations in the success rate infinding new work between the Belgian and Italian groupsof ex-miners on the one hand, and their Turkish andMoroccan counterparts on the other;

● there was also a marked variation in the take-up of initialtraining programmes provided by KS, with miners fromimmigrant communities significantly less likely toparticipate. This led indirectly to the need for anorganisation such as BLM, created to provide assistancedirectly to disadvantaged groups such as these;

● by 2000, eight years after the final mine closures, fewerthan 300 ex-miners remained permanently unemployedin Limburg;

● by the early 1990s, average salaries for ex-miners hadfallen by around 13% to BFr40,000/month;

● much of the investment in new employment in Limburgresulted in the creation of small- and medium-sizedcompanies. This is balanced to some extent by the arrivalof larger employers, such as Ford at Genk, which was inthe process of opening at the start of the project; and

● BLM has shown its ability to adapt the conceptsdeveloped in Limburg to other countries where coalindustry restructuring is in progress, as has been shownby its involvement in the EU’s Tacis-sponsoredprogramme in Ukraine.


Belgium

44 France


Unlike in some other European countries, the French coalindustry was fragmented, with numerous small coal basinslocated across the country complementing the largerproduction centres in the Nord-Pas de Calais and Lorraineregions, which are shown in Figure 2. Since the 1960s theFrench government has followed a policy of increasingreliance on nuclear generating capacity for the country’selectricity supplies, thus reducing demand for domesticallyproduced steam coal, while the Europe-wide decline in steelproduction simultaneously reduced French coking coalrequirements.

With the exception of a brief period in the 1980s, the trend incoal production throughout much of the second half of the20th Century was gradually downwards, with acommensurate loss of employment. As shown in Figure 7,production fell from 58.2 Mt in 1960 to 20.7 Mt in 1980, tounder 10 Mt by 1994 and to 5.1 Mt in 1999. At the sametime, the number of miners employed in the industry reduced

steadily from around 350,000 at the end of the Second WorldWar to 216,800 in 1960, 60,900 in 1980 and 9000 in 1999(see Figure 8). Traditionally, the bulk of French coal outputcame from deep mines, with a maximum of 3.2 Mt/y ofsurface-mined coal being produced in the early 1980s (CdF,2000a).

Since 1946, the coal industry in France has been under stateownership, operated by Charbonnages de France (CdF),which has also had responsibility for implementingsuccessive social and economic rehabilitation programmesfor the areas affected by the run-down of the industry. Underplans put in place in 1994, French coal production will ceasecompletely by 2005 at the latest. This chapter addresses theclosure procedures that have been used throughout the Frenchcoal industry since the 1960s, covering the major Nord-Pasde Calais and Lorraine coalfields as well as small productioncentres in the south of the country.


The creation of Charbonnages de France in 1946 broughttogether the assets of numerous private-sector coal producers.In terms of the fortunes of the coal industry, the remainder ofthe 20th Century can then be divided into four distinctperiods:● increasing production during the late 1940s and through

the 1950s to support post-Second World War economicreconstruction;

● the first period of decline, covering the 1960s and early1970s;

● a recovery of production following the 1973 oil crisis,with ambitious targets set in 1981 by the government forincreasing output significantly by 1990; but

● further decline from 1983, culminating in the decision toclose the industry completely by 2005 (CdF, 2000b).

Of the nine main coal production centres in France (Nord-Pasde Calais, Lorraine, Aquitaine, Auvergne, Blanzy, Cévennes,Dauphiné, Loire and Provence), the Nord-Pas de Calaiscoalfield was traditionally by far the most important. Of the350,000 people employed in the coal industry in 1947,220,000 worked in this area alone. While the trend towardslower employment began almost immediately after theSecond World War, production increased in response to risingdomestic demand, reaching a peak of 58.7 Mt/y in 1959(Liabeuf and Drouard, 1992).

Reductions in employment during the 1950s and early 1960scame about largely through natural wastage, but by the early1960s CdF had already entered into the first of a series ofagreements with its workforce, in specific areas in which jobswere to be lost, over terms and conditions for redundancy orretraining. The first of these, which covered the southerncoalfields, came into effect in the 1960s, and was followed byPlans Sociaux (see Section 4.3, below) for the Nord-Pas de

20

0

2000

Year

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Figure 7 Coal production in France, 1950-1999(IEA, 2000)

0

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Figure 8 Employment in French coal mining,1960-1999 (CdF, 2000a)

Calais. Formal agreements between CdF and the miningunions over measures aimed at assisting miners in retrainingfor new jobs were concluded in 1962. Concurrently, theFrench government confirmed its intention to attract greaterindustrial diversification in the mining regions, creatingregional development agencies and facilitating the availabilityof support finance for new ventures, complementing themeasures being adopted by CdF and its operatingsubsidiaries. These moves culminated in 1967 with thecreation of the special industrial development organisation,Société Financière por favoriser l’industrialisation desRégions Minières (SOFIREM) which, as a wholly ownedCdF subsidiary, continues to have responsibility forpromoting and supporting the development of alternativeindustrial employment in the mining districts.

The decline in coal production and employment that beganwith the publication of the ‘Jeanneney Plan’ in 1960,continued under subsequent government energy plans untilthe oil crisis of 1973. While a further decline was anticipated,the rate of decline slowed during the remainder of the 1970s,with a change of government in 1981 resulting in new, higherproduction targets being set for the coming ten years. Miningindustry recruitment, which had been minimised for 15 years,was revived in the mid-1970s, reaching a peak in 1981–82,helping to offset the numbers of miners who were stillleaving the industry of their own volition.

A further abrupt change in government policy came in 1983,with the requirement, not for continued recruitment, but forreducing the existing 60,000 workforce by 6000 annually. In1986, the decision was taken to close the remaining Nord-Pasde Calais mines, a task that was completed in 1990. Faced withthe need to continue cutting capacity, in 1994 CdF negotiatedthe Pacte Charbonnier (Coal Pact) with most of the unionsrepresenting its workforce, effectively setting a timetable forthe final ending of domestic coal production in 2005 throughphased closures of the remaining mines. The last operations incentral and southern France were mainly scheduled for closureby the end of 2000, leaving three deep mines in the Lorrainecoalfield and one in Provence as the residual production core.

4.2 Social impact

In 1960, CdF employed 216,800 people, of whom 122,800worked in the Nord-Pas de Calais coalfield, 43,300 inLorraine and the remainder (50,700) in the Centre-Midi(central and southern French) coalfields. By 1980, totalemployment had fallen to 22,850. Employment trends in thethree main production areas are shown in Figure 9, whichclearly demonstrates the effects on regional employment ofthe phased closure of the coal industry.

Looking at each of the three regions in turn, CdFemployment in Nord-Pas de Calais virtually halved between1960 and 1970, then reduced by a further two-thirds over thenext ten years, reaching just 26,000 in 1980. By 1990, thishad fallen to a residual 5300, and by 1993, all CdFemployment in the region had ceased, ending 270 years ofcoal mining that had effectively formed the foundation for allother industrial activity there.


France

The first period of job losses in the region, during the 1960sand early 1970s, also coincided with major restructuring inits other traditional industries – steel and textiles. It wasagainst this background, therefore, that CdF introduced itsfirst programmes, aimed mainly at finding new employmentfor younger ex-miners. Few major employers came into thearea, the state-owned car-maker Renault being one exception,with most of the new job opportunities supplied by small-and medium-sized companies. During the 1990s, Toyota alsoopened a new car plant at Valenciennes, but that again wasagainst the general trend of industrial development here.

The recruitment drive in the 1970s led to the employment ofboth long-term local miners and contract workers, mainlyfrom Morocco. In all, around 70,000 Moroccans worked forCdF on 18-month contracts in the 20 years from 1960 to1980, with the majority being taken on in Nord-Pas deCalais. While providing the company with a short-termanswer to its labour shortage at that time, it also ensured thatseverance and repatriation terms were covered contractually,so effectively curtailing CdF’s commitment in this respect.During the second restructuring period, leading up to closurein 1993, Nord-Pas de Calais lost its remaining 14,000 miningjobs; of these, 1000 were expatriate contract workers.

Elsewhere in France, the impact of mine closures variedsignificantly from area to area. Although operated since 1968by a single production subsidiary of CdF, Houillères duBassin du Centre et du Midi (HBCM), the individual mineswere located in areas with wide-ranging social and economicdifferences. For example, the St Etienne coalfield, which in1960 provided 11,700 jobs in an ‘old’ industrial area andwhere mining finished in 1994, faced problems that were inmany ways similar to those of Nord-Pas de Calais, if on asmaller scale. The Blanzy coalfield, by contrast, which lost8000 jobs, did not have the same level of dependence on asingle industry, and neither the Auvergne nor the Dauphinéregions suffered the same economic impact. Auvergne, thefirst HBCM area to close, is predominantly agricultural,while at Dauphiné, located at an altitude of 1000 m in the

0

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20 Lorraine

Nord - Pas de CalaisCentre - Midi

Figure 9 Employment in the French coal industry,by region, 1960-1999 (CdF, 2000a)

French Alps, alternative sources of employment such astourism and winter sports offered some relief to this isolatedcommunity.

Finally, coal industry employment in the Lorraine region innortheastern France shrank from 43,300 in 1960 to 24,000 in1980 and 7250 in 1999. In a region in which the industry hadbeen founded on iron ore and coal mining, similar problemsto those in the Nord-Pas de Calais were encountered,although the greater effects of cross-border economic activityhelped to mitigate these to some extent. The region wasdisadvantaged by being geographically isolated from theother centres of economic activity in France, a situation thatis still in the process of being rectified.

4.3 Plans Sociaux

The provision of assistance in finding alternative jobs, and inother ways to offset the impact of mine closures in France,has to be seen in the context of the legal rights that minershave enjoyed under the terms of the Statut du Mineur, whichcame into being in 1946. This provides for specific terms andconditions of mining industry employment, including theprovision of social facilities such as free housing and heatingfuel (Patoz, 1996). French miners also benefit from theprovisions of a special social security system that came intoforce in 1936, designed to provide both pensions and accessto a higher standard of healthcare than was then available tothe general population. While this advantage has beenwhittled away by subsequent amendments to France’s generalsocial security system, the parallel system remains in place,retaining a strong psychological tie for its members.

Plans Sociaux, which came into being after the decision wasmade in 1986 to close the Nord-Pas de Calais coalfield,represented a new concept in developing a comprehensivepackage of measures aimed at offsetting the social andeconomic effects of industrial closure. Whereas measuresintroduced in the 1960s had been targeted at helping youngerminers to leave the industry and find new jobs elsewhere, andat providing incentives for older workers to take early


France

retirement from an industry that was continuing to function,the Plans Sociaux extended this to provide a structure withinwhich mine closure was the final event (Drouard, 2000).

The Plan Social for the Nord-Pas de Calais coalfield wasfollowed by others for the communities affected by latermine closures in central and southern France. In each case,the scheme was introduced two years before closure wasscheduled, so permitting the workforce to come to terms withthe reality of having to make choices about their futures, aswell as providing sufficient time for retraining to take place.Specific details of the options available to former miners aregiven in Section 4.6.

A major change from earlier schemes was the introduction ofthe congé charbonnier de fin de carrière (CCFC), whichallowed an older miner the right to remain a CdF employeebut effectively to be on ‘end-of-career holiday’ until reachingthe retirement age threshold of 50. Specific criteria for beingable to make use of the CCFC scheme included a minimumage of 45 with 25 years’ service with CdF.

Under the Plans Sociaux, CdF had a responsibility to findnew employment for its younger miners, with the option ofreturning to the company within two years if the new job didnot prove satisfactory. While younger people were obligedunder the plans to leave CdF, the company in turn had anobligation to find suitable alternative work for them. With thesigning of the Pacte Charbonnier in 1994, this commitmentno longer applies to the residual workforce, for whom theavailable employment options within CdF have obviouslybeen reduced over time.


Much of the work involved in both attracting newemployment to old coalfields and providing retraining forformer miners has been undertaken by CdF and specialistsubsidiaries such as SOFIREM, and FINORPA for theNord-Pas de Calais region (see Section 4.8). In many cases,the companies operate in parallel with other national and

Table 4 Agencies involved in economic regeneration in the Lorraine coalfield (IMCL, 1998)

Level Agencies Main activities

National DATAR National planningInvest in France National investment attractionGIRZOM Derelict mine land reclamation

Regional DATAR-APEILOR Promoting direct foreign investment into the Lorraine region

Département CAPEM Management of participants in economic developmentactivity in the Moselle area, including the Lorraine coalfield

Sector SOFIREM Alternative work creation

Communes ACTIPROMO Inter-commune association, coordinating and monitoringbusiness development activities

Business Chambers of Commerce Information and local business investment promotion

regional organisations, including the French nationalplanning agency DATAR (Délégation à l’Aménagement duTerritoire et à l’Action Régionale), the Ministry of Industry,regional, departmental and local development agencies andthe departmental authorities (préfectures). During projectimplementation, there has been close liaison between CdF,SOFIREM and the préfecture involved, with the préfecturebeing ultimately involved in all public funding, whether it isprovided from national, regional or European Union sources.The préfecture also has the responsibility for ensuringcompliance with EU regulations on funding.

On the national level, the attraction of inward investment tothe country, but not specifically within the coalfield areas, isthe responsibility of the Invest in France Agency andDATAR. Also of particular significance to the coalfields,GIRZOM (Groupement Interministériel por laRestructuration des Zones Minières) has responsibilities inthe area of reclaiming derelict mine land for further industrialor other use (IMCL, 1998). The relationships between thevarious agencies involved in Lorraine are shownschematically in Table 4.

In relation to pensions and other benefits provided to formerminers, La Caisse Autonome Nationale de la Sécurité Socialedans les Mines (CANSSM – the national social securityscheme for the mining industry) has overall responsibility formanaging these matters. In addition, l’Association Nationalepour la Gestion des Retraités (ANGR – the nationalassociation for the management of retirement benefits),which was established in 1989, has specific responsibility foroverseeing concessionary heating and housing benefits forex-miners and their dependents, as well as managing benefitsfor miners on the CCFC scheme.


In common with those in other Western European countries,the French coalfields have received assistance from threeprincipal EU sources: the ECSC; the EU regionaldevelopment and social funds; and the RECHARprogrammes. Many of the former coalfields in France arecovered by Objective 2 areas for EU structural fundingpurposes, with a few areas granted Objective 1 status.

In comparison to some other EU member countries, France’scoalfields did not receive substantial support throughRECHAR. Its assistance during the second phase of theprogramme (1994-1999) totalled E36 million (US$43million) out of a total programme budget of E471 million.Both the UK and Germany, by contrast, received aroundE185 million each (EC, 1999). Assistance under RECHAR Itotalled ECU49.6 million (US$59.5 million), of whichECU39.8 million was allocated to infrastructural projects,ECU5.6 million to economic activities, such as support forsmall- and medium-sized enterprises, and ECU3.1 million totraining (IMCL, 1998). In its 1997 report on the StructuralFunds, the EC described one specific RECHAR-fundedproject in the Nord-Pas de Calais coalfield. Aimed at theredevelopment of former industrial land, the programme


France

recognised the area’s mining heritage and historical value,and sought to integrate this with other potential multi-purposeuses (EC, 1997).


While previous plans included the opportunity for minersaffected by mine closure to remain within CdF, even if thismeant moving within the company to another part of France,this has been omitted from the current Coal Pact, with itsobjective of finally ending French coal production. Inaddition, the company is no longer obliged to find its formerworkers suitable alternative employment. Thus the situationin 2001 is somewhat different from that pertaining during the1980s and 1990s, especially as far as options for former CdFemployees are concerned.

Since the early 1980s, CdF has operated a policy of notrecruiting any new miners, although it has maintained acomprehensive training programme for its residual workforceas a means of ensuring that its own operational needs are metinternally. Nonetheless, the effects of this ‘no recruitment’policy are becoming increasingly apparent as the industrycontinues to retract, opening the question as to whether thecompany will, in fact, be able to maintain production right upto its 2005 closure deadline. One further consideration is thatexperience has shown that skilled workers have been amongstthe first to take the opportunity of leaving for otheremployment, leaving a less-skilled residual workforcebehind.

One of the key principles adopted by CdF during all of itsclosure programmes has been the concept that it is better tospend money on training its ex-employees for new jobs ratherthan paying lump-sum redundancy. Although takingredundancy has been an available option, only a smallproportion of CdF employees have followed this route,preferring that the company should assist them with findingnew work and providing them with appropriate training.Individuals who preferred to seek new work on their own, orto undertake longer training courses, were entitled to‘adaption leave’ for up to one year, with the company paying65% of their previous net salary plus normal benefits for thisperiod (Franz, 1994).

The Plans Sociaux adopted in closure campaigns during thelate 1980s and early 1990s effectively grouped those affectedinto three categories:● younger people, who could not achieve the criteria of a

minimum age of 45 with 25 years’ company service, andwho had to find employment elsewhere;

● people who could make use of internal transfers to reachthe age/service threshold within a stipulated time frame;and

● miners who were eligible for immediate entry to theCCFC scheme.

Taking individual coalfield areas as illustrations of theoptions available to the work forces involved, in Nord-Pas deCalais some 14,000 jobs were lost between 1986 and 1990.Around 1000 miners were of Moroccan origin and were on

short-term contracts; of the remainder, 5000 were obliged tofind new jobs while the balance of 8000 elected to takeretirement in one form or another. Similarly, in thesouthwestern Carmeaux coalfield, where closure of theunderground mine and coke plant was followed by closure ofthe remaining opencast operations, some 800 workers leftCdF voluntarily while the company had to find new work for500, and 500 took retirement.

One major initiative adopted by CdF in terms of placingformer employees in alternative work was the contract signedin 1983 with the French state electricity utility, Electricité deFrance (EdF). Under this agreement, EdF undertook to take onup to 1000 former mine workers annually, although the totalnumber that actually moved jobs through this scheme wasaround 3000. Candidates for transfer were selected and trainedby CdF, and had the opportunity to return to the companywithin two years if their new position proved unsatisfactory.The fact that both state companies had comparable corporatestructures increased the attractiveness of this scheme topotential transferees. The scheme ended in 1999.

Retirement options available to CdF employees under thePlans Sociaux and the Pacte Charbonnier allow participationin the CCFC scheme for those aged 45–50, early retirementfor workers aged 50–60, and normal retirement under thestate schemes from age 60 on. Benefit entitlements for theCCFC include 80% of the previous net salary plus freehousing and heating. From age 50, a former miner receives abasic Miners’ Social Security Fund pension plus anyadditional CdF pensions to which he may be entitled, withthis additional liability being taken over by the fund after age60. Reflecting the aging workforce that has fewer options forinternal transfers, there has been an increasing take-up ofCCFC entitlements in the Lorraine coalfield as final closuregets nearer, with around 1000 former miners taking this routeto retirement annually.


During the entire period that it has been downsizing, CdF hasboth operated its own training centres and has funded trainingfor its former employees from outside agencies. Both typesof training centre have developed programmes specific to therequirements of new employers. Experience has shown thatpotential employers appear to have greater confidence intraining provided by independent suppliers, rather than CdFitself, although the company’s own training centres weresuccessful in both the Nord-Pas de Calais and Centre-Midiregions.

The success rate achieved in terms of training for long-termfuture employment has depended to a certain extent on theprevailing economic conditions. For instance, during thegeneral economic ‘boom’ years of the late 1980s, there washigh demand for workers for transport, construction andsimilar occupations; changed economic circumstances duringthe early 1990s led to the realisation that systems usedpreviously would not be able to cope with the final closure ofCdF’s operations, and hence to the negotiation of the PacteCharbonnier.


France

In the 26 years from 1973 to 1999, CdF spent a total of overFFr5,556 million (US$800 million) on training for itsemployees. The proportion of its workforce that underwentsome form of training varied year by year, ranging from25–30% at the start of the period to around 70% at the startof the 1990s. First-job training within the company wasphased out by 1986, being overtaken exclusively by trainingfor upgrading skills and for the change to alternativeemployment outside the company. In all, the companyinvested in some 3.6 million man-days of training during thistime, at an average annual cost of FFr214 million (US$30.5million) (Berte, 2000).

4.8 Attracting inward investment

Aside from providing training services to meet the needs ofnew employers in the coalfield areas, CdF has had a majorinput into attracting alternative employment opportunities tothese areas. The lead organisation in this respect, SOFIREM,was established as a wholly owned CdF subsidiary in 1967,since when it has been actively involved in the creation ofalternative work throughout the French coalfields. At the endof 2000, it was active in 11 areas, with the emphasis onLorraine in view of the impending final closure of the coalindustry there (Fix, 2000). While its initial objective was toensure large-scale replacement of employment opportunities,in which new employers were urged to take on formerminers, this concept soon changed towards the role ofmaintaining economic activity in the affected regions throughthe promotion of any type of new work, without any suchconstraints on labour hiring. The objective now is to create asmany jobs in the coalfield as are lost from coal mining.

Throughout its existence, SOFIREM has adopted a proactiverole in targeting economic development in France’s coalmining regions. Its aims have been to maintain employmentin areas affected by coal industry downsizing, both byattracting new industries and by providing appropriatetraining for former miners to meet their different needs. Inessence, the company acts as a regional development agencyin parallel with other such government organisations at bothnational and regional levels, initially searching for potentialnew investors for particular areas, and then providing them,free-of-charge, with financial and other assistance.

With an established capital base of some FFr622 million(US$95 million), SOFIREM is able to offer a range offinancial products to assist companies in setting up theiroperations in coal mining districts. For example, it can takeup to 30% of the equity in a new venture, with a holdinglimit of 7–8 years, and can provide loans for similardurations. Its annual level of investment in recent years hasbeen in the order of FFr100–150 million (US$13.5–20.3million), reaching a peak of FFr200–250 million in 1992-93.Since the mid-1990s, SOFIREM has been able to recycleequity withdrawn from earlier projects into new ventures.

In order to target the specific Nord-Pas de Calais area,SOFIREM established la Société financière du Nord-Pas-de-Calais (FINORPA) in 1984 as its operating subsidiary in theregion, and later created an equivalent organisation, SORID,

as its operating agency for the Decazeville area in southernFrance. SOFIREM itself continues to operate in Lorraine andin the Centre-Midi coalfield areas. 1984 also featured theformation by the French government of Fondd’Industrialisation du Bassins Miniers (FIBM – the MiningRegions Industrialisation Fund), which focuses on thedevelopment of infrastructure within the coalfield areas, theprovision of new facilities such as industrial parks, and inproviding training facilities, research and development,industrial automation and business services to prospectiveinvestors.

Administered by CdF, FIBM also makes direct subsidisedgrants to incoming companies, being able to fund up to 50%of land purchase costs and up to 20% of building costs fornew plants, with a limit of FFr50,000 (US$6750) for each jobcreated within three years. Since 1984, FIBM has allocatedan average of over FFr80 million per year to financecorporate real estate, totalling FFr1300 million(US$175 million), while investing nearly FFr530 million intraining activities. Table 5 shows the various services thatSOFIREM and FIBM can provide (SOFIREM, 2000).

An illustration of the techniques used by SOFIREM in jobcreation is given by its activities in Lorraine. Theorganisation first became involved in the region at the end ofthe 1960s, at a time when the communications infrastructurewas poor and the area’s economy was heavily dependent oncoal mining. SOFIREM’s initial promotion activities duringthe 1970s, aimed at German companies in particular, weresuccessful in creating around 7000 new jobs, with trainingfor the new positions, as opposed to its traditional miningsector training, funded by CdF. Although SOFIREM’semphasis changed during the period from the mid-1970s tothe mid-1980s from active to passive job creation, it stillmanaged to attract a further 5000 places to Lorraine at thistime. New large-scale employers include Viessmann (heatingequipment), Continental (vehicle tyres), Interpane-Pilkington(glass), Grunfoss (pumps) and Delphi (automotive supplies)


France

while the major recent success has been the establishment ofthe Smart car plant – a self-contained factory complexincorporating both the final assembly line and all of its maincomponent suppliers – at Sarreguemines-Hambach.Representing an investment by Daimler-Chrysler and itssuppliers of some FFr2800 million, ‘Smartville’ opened in1997, provides around 1500 jobs and is seen as a landmark intransforming the industrial base of a former mining area intosomething that is much more sophisticated (Berte, 2000).

Since 1967, SOFIREM and FINORPA have assisted in thecreation of around 100,000 jobs in the French coalfields,involving a total investment of some FFr3700 million(US$500 million). Of this, costs of around FFr1600 millionhave been incurred since 1984, resulting in the creation of24,000 new jobs. Typical costs are currently about FFr65,000(US$8800) per job created.


Over much of the past 30 years, France has adopted a highlystructured approach to both the closure of its coal industryand the creation of alternative employment opportunities forthose who could not meet the criteria of the time for someform of retirement. Thus even in areas in which there havebeen massive job losses, such as the Nord-Pas de Calaiscoalfield where more than 200,000 mining jobs went between1947 and 1990, there has been a positive approach toensuring a continuity of economic activity. This may not havebeen easy, given the rapid decline in other traditionalindustries such as metallurgy and textiles, and certainly hasnot been cheap to implement. Nonetheless, both the Nord-Pasde Calais and Lorraine coalfields have benefited fromsubstantial inward investment by French and foreigncompanies that have seen their geographical location withinthe wider western European market as being a significantincentive to success. More generally, France is also attractiveto inward investment on account of its relatively low labourand energy costs in European terms, to which the incentivesoffered by SOFIREM and its partner agencies add furthervalue.

The adoption by all of the parties involved of Plans Sociauxand the later Pacte Charbonnier has set out very clearly thestructure and time frame for each phase of the closureprogramme, allowing those most directly involved sufficienttime to decide their preferred course of action and to receiveretraining for alternative work where this has beenappropriate. The contract between CdF and EdF to allowformer mine workers to transfer from one state industry toanother was also useful, in that it permitted continuity withinorganisations with comparable structures.

Future liabilities for CdF include the statutory rights offormer miners and their widows to free housing and heating,which may last until the middle of the 21st Century unlesssome replacement scheme is implemented, payments underthe CCFC scheme (until 2010-2015), and the cost ofadditional pensions (until around 2020). Once CdF is woundup, however, these liabilities will revert to the French

Table 5 Services provided by SOFIREM andFIBM (SOFIREM, 2000)

SOFIREM

Financingtaking temporary minority shareholdingsdeferred repayment short-term loans (up to 7 years)underwriting convertible bondsparticipating in capital loans, equivalent to equity capitalmedium-term loans for working capital

Business supportassistance in locating appropriate business premisespreparing financial plansassistance in obtaining grants and other financial incentives

FIBM

development of business infrastructure in coalfield areastrainingbusiness adviceresearch and development

government, which will have to finance the long-termresidual costs involved. In late 2000, La Cour des Comptes(the French state audit commission) published a report on thecosts involved in the ending of coal, potash and uraniummining in France, with liabilities for state funding estimatedas:● FFr18,900 million (US$3375 million) between 1999 and

2005 in respect of retirement benefits and pensions forformer miners and their dependents;

● FFr51,000 million (US$9100 million) between 1995 and2005 in support for the coal industry, of whichFFr34,000 million represent subsidies to cover operatinglosses. The annual cost to public finances for each CdFemployee is thus about FFr350,000 (US$62,500); plus

● FFr331,000 million (US$59,000 million) in pensions andbenefits administered by CANSSM during the period2000-2040 (Cour des Comptes, 2000).

With their parent company dissolved, both SOFIREM andFINORPA will have the opportunity to apply their expertiseas more general regional development agencies, lessgeographically restricted to the old coalfield areas. Thisprocess is already under way, although whether the future forthese companies will be in the state or private sectors has yetto be decided.

Significant conclusions that can be drawn from the Frenchexperience between the late 1960s and the late 1990s include:● The statutory structure of Charbonnages de France as an

Etablissement Public á Caractère Industriel etCommercial (a public industrial and commercialorganisation) means that its investments and costs arebacked by the French state through subsidies and thereallocation of costs to other state budgets. This hasallowed CdF to continue to function as the principalmedium for handling both coal industry capacityreductions and the programmes needed for economicregeneration of the areas involved;

● The use of long-term strategies in relation to the closureor capacity reduction in major employers such as thecoal, steel, shipbuilding and other large-scale industriesprovides the opportunity for realistic planning in termsof opportunities (such as attracting new employers) andliabilities (including the short-term costs incurred intraining programmes and the longer-term implications interms of early retirement benefits and pensions);

● The creation of a lead organisation (SOFIREM), chargedwith attracting new employment and ensuring that theavailable workforce had the appropriate skills for thenew work has had major benefits in terms of continuityand long-term employment strategy in the coalfieldareas;

● SOFIREM’s structure is such that it can respond quicklyto different circumstances, and can thus adapt itsstrategies to meet changes in the requirements ofpotential employers and CdF alike;

● It is important to be able to custom-design programmesto the needs of different geographical areas with distinctsocial and economic conditions: schemes that wereappropriate for large coalfields in strongly industrialareas such as Nord-Pas de Calais had to be modified for


France

use in the smaller coalfields in central and southernFrance;

● The opportunity for a proportion of the workforceaffected by mine closures to transfer to another statecompany provides a level of psychological security thatmight otherwise not be present in private-sectoremployment;

● In terms of headline numbers, job creation in the formercoalfield areas (24,000 between 1984 and 1999) has beenmore than sufficient to provide for the numbers offormer mine workers who remained in the employmentmarket. During this period, 13,200 underwent some formof training while a further 12,200 left the industrythrough natural wastage, some of whom would haverequired new work in the coalfield areas. A further19,400 took retirement in some form (including CCFCentitlement); and

● The cost per job created by SOFIREM of FFr65,000(US$8,800) provides an indication of the level ofinvestment needed today in terms of organisation,promotion and business assistance to attract newemployment to traditional coalfield communities.

55 Germany


Unlike its neighbours in Western Europe, Germany has hadto contend with the restructuring not only of hard coalproduction in the west of the country, but also lignite miningin the states that comprised the former German DemocraticRepublic (GDR). The causes, scale and the time frame foreach of these processes could not have been more different:while the hard coal industry has undergone a long-term,structured contraction in terms of both output andemployment, the sudden reduction in demand for lignite fromthe eastern German lignite fields following reunification,together with the structural changes that took place duringthe transition to a market-led economy in the neue länder(new federal states) resulted in a rapid and massivecontraction in employment there.

The decreases in German hard coal production have resultedfrom long-term changes in the country’s energy supply

balance. From a situation in the 1950s where coal accountedfor 70% of West German energy demand (and an equivalentposition in relation to lignite in the former East Germany inthe 1980s), coal now accounts for around 25% of Germany’senergy. Geopolitical changes that took place in Europe in the1970s and 1980s led to repeated reassessments of the needfor Germany to maintain a high level of energy supplysecurity.

Conversely, it was the reduction in Soviet oil supplies to EastGermany in the early 1980s that prompted a ten-yearexpansion programme for lignite mining there, reaching apeak of 312 Mt in 1985 before suffering a severe reduction indemand as the economy of the eastern länder began torespond to the pressures of reunification. Output fell bynearly one-quarter between 1990 and 1991, and it was notuntil 1999 that the downward trend was reversed, by whichtime eastern German lignite output was around 65 Mt(see Figure 10). Employment in the east German ligniteindustry fell from more than 130,000 at the start of the 1990sto 10,100 in 2000 as the industry was restructured undermarket-economy management systems (see Figure 11).

Most of Germany’s hard coal production has been obtainedfrom the large Ruhr and Saar coal basins, together with anumber of smaller outlying deposits such as those nearAachen and Ibbenbüren. In the post-Second World Warperiod, German hard coal production reached a peak ofaround 155 Mt in 1956, after which both production andemployment have been in decline (see Figures 12 and 13).Output fell to 148 Mt in 1960, 118 Mt in 1970, 94.5 Mt in1980 and 76.5 Mt in 1990. Thereafter, the rate of declineaccelerated, with an output of just 44 Mt in 1999.Simultaneously, the coal-mining workforce fell from over600,000 in the mid-1950s to 115,000 by 1992 and 66,400 in1999. In 1997, the federal government and the governments

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Figure 10 Eastern German lignite production,1960-1999 (Statistik der Kohlenwirtschaft,2000)

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Figure 11 Employment in the eastern Germanlignite industry, 1970-2000 (Statistik derKohlenwirtschaft, 2000)

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Figure 12 German hard coal production, 1950-1999(IEA, 2000)

of the coal-producing länder reached an agreement with themining companies and the trades unions whereby aid wouldbe paid to the hard coal mining industry until 2005. Thisagreement provided for annual reductions in the level of aidfrom DM9250 million in 1998 to DM5300 million in 2005,this decline being matched by cuts in output to 26 Mt/y and areduction in the workforce to 36,000 by the end of thisperiod.

This chapter reviews the restructuring processes undergoneby the hard coal and lignite mining sectors in western andeastern Germany respectively. It does not address the westGerman lignite industry, which has not had the same level ofrestructuring during the period under review, although recentderegulation of the German energy market is beginning tohave an effect on employment here as well.

5.1 Background to restructuring

Since the German hard coal and lignite industries havemarkedly different backgrounds, each is discussed separatelyin the following sections. Despite these differences, there hastraditionally been strong solidarity amongst the workforcewithin German coal mining, reflecting the Federal Republic’sadoption of ‘consensus politics’ since the Second World War.This has been a major influence on the attitudes of miners,their trades unions and the various levels of governmentinvolved in restructuring the industry, such that the conceptsof older miners taking early retirement to make way for theiryounger counterparts, for example, or of unions agreeing to


Germany

short-time working in order to cut costs, are well-establishedwithin the industry.

Upon reunification, the federal government inherited anumber of obligations from the former GDR authorities,particularly in relation to employment, pensions and otherlabour issues. Employees in the eastern German ligniteindustry were also brought into the existing structure formining industry pensions, with one government agency(Bundesknappeschaft) now responsible for all aspects ofpensions and industry-specific benefits throughout thecountry.

5.1.1 Hard coal

For the first ten years after the Second World War, hard coalplayed a critical role in supplying Germany’s (in particular,West Germany’s) energy needs. However, by 1957government policy had changed in favour of increasedreliance on cheaper imported oil, and the hard coal industryquickly entered a crisis period in which production capacitywas significantly greater than falling demand. In the Ruhr,Aachen and Ibbenbüren coalfields (see Figure 2), coalproduction was in the hands of the private sector, while in theSaar, production was brought under one operating company,Saarbergwerke, which was established jointly by the federaland Saarland governments in late 1957.

Between 1958 and 1970, two-thirds of the hard coalindustry’s employment was lost, the total falling from600,000 to 200,000. In response to the crisis in the Ruhrcoalfield, amalgamation of 26 out of the existing 32producing companies resulted in the formation of RuhrkohleAG (now RAG) in 1968 as a private-sector company jointlyowned by the leading German steelmakers and electricitygenerators. The subsequent 15 years were marked byincreased investment, a reduction in the rate of decline in thenumber of coal-industry jobs and, significantly, with ageneral reduction in the average age of the workforce, whichin turn was better skilled (Schubert and Bräutigam, 1995).

Special arrangements between the hard coal producers and itsprincipal customers – the steel and electricity supplyindustries – provided long-term market guarantees for theiroutput, albeit at a significant cost in terms of subsidies. TheJahrhundertvertrag (Century Contract) between theproducers and generators took effect in January 1981 andexpired at the end of 1995, having been extended severaltimes. It was funded by a levy on electricity consumers, therate of the levy having increased from an initial 4.5% to8.5%. Guaranteed sales of coking coal to the steel industrywere governed by the Hüttenvertrag, introduced in 1969, alsolater extended, and ending in 1998.

Faced with concerns from the European Commission over thelevel of subsidisation, and a continuing reduction in demand– in particular from the European steel industry, by the late1980s it became clear that overcapacity once againrepresented a major threat to the hard coal industry. Thegovernment and producers agreed lower output targets which,in order to implement, involved the closure or amalgamation

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Figure 13 Employment in Germany's hard-coalmining industry, 1957-2000 (Statistik derKohlenwirtschaft, 2000)

of a number of the highest-cost operations, including those inthe Aachen coalfield. Further capacity rationalisation wasnegotiated in the early 1990s, the process culminating withthe agreement achieved in 1997 between all the partiesinvolved that provided the framework for production,employment and subsidisation between 1998 and 2005.Central to the scheme was the amalgamation of all of thecountry’s hard coal mining interests into Deutsche SteinkohleAG, a wholly owned RAG subsidiary. Subsequent to this,German hard coal output has continued to fall at a faster ratethan anticipated, with the effect that job losses have beenaccelerated (ICR, 2000).

5.1.2 Lignite

During most of the second half of the 20th Century, Germanywas the largest producer of lignite in Europe. Beforereunification in 1990, both the Federal and DemocraticGerman Republics were major producers in their own right,the GDR in particular relying on domestic lignite productionfor a major proportion of its energy needs. Reunification,which brought the eastern länder into the structure of theFederal Republic, also brought a rapid re-evaluation of theenergy supply situation in this part of Germany, coupled withthe complete transformation of the regional economy. Thisprocess is continuing.

Lignite mining in the former GDR was concentrated in twomain areas: the Lausitz (Lusatian) field around the city ofCottbus, and the Mitteldeutsche (Central German) field nearLeipzig. Production was the responsibility of kombinats,multi-faceted enterprises that incorporated not only lignitemining and processing but also all of the social andcommercial systems associated with their core business.Restructuring of the major lignite-mining companies beganunder the direction of the Treuhandanstalt privatisationagency in the early 1990s, with the initial aim of making thecore businesses viable for sale into the private sector. Manyof their peripheral activities such as equipment supply andrepair companies, and social responsibilities such as clinicsand other welfare facilities, were either transferred to otherauthorities or were reconstituted on a stand-alone basis.

Essentially, the eastern German lignite mining industryunderwent a change from being labour-market dominated (inwhich employment was the key business criterion) to beingcommercial in approach. The impact on employment withinthe lignite industry mirrored that of the general transitionfrom central planning to a market economy on employmentwithin the neue länder: there was widespread shedding oflabour in order to reduce costs within core businesses, andunemployment rates within eastern Germany consequentlyrose significantly. This situation has yet to be resolved.

5.2 Social impact

5.2.1 Hard coal

In the 45 years since 1957, the German hard coal industry


Germany

has shrunk from 153 mines to 12, and the labour force by90%. The first major contraction in output and employment,which occurred between 1957 and the mid-1960s, cost theindustry some 400,000 jobs of which at least 270,000 were inthe Ruhr coalfield. As Hessling (1995) notes, ‘Pit closuresand the rapid reduction in workforce were often uncontrolledand uncoordinated’. Fortunately, the mine closure programmecoincided with a period of strong economic growth inGermany, such that there was a shortage of labour in manyother sectors, including construction. In addition to newemployment opportunities in the state of Nordrhein-Westfalia– such as the Opel car plant in Bochum – there wasconsiderable out-migration of former miners as they foundalternative work in other parts of the country, especiallysouthern Germany. Self-initiative was, nonetheless, the norm,with minimal assistance at this stage from the federal andländer governments. Unemployment in the Ruhr district ofjust 2% in 1970 reflected the positive labour marketconditions of the time (Noll, 1995).

By the 1970s, though, deterioration in the general economicsituation had resulted in there being fewer alternative jobopportunities, and the governments and industry had todevelop appropriate adaption systems whereby the conceptthat mining jobs could be lost in a ‘socially acceptable’manner – in which all those who had been made redundantwere guaranteed alternative work or some other means ofrecompense – could be maintained. The principal instrumentsadopted since this time included early retirement and variouscompensation payments to allow ex-miners effectively to‘pre-early retire’. These programmes, centred around earlyretirement as a means of shedding labour and used inconjunction with a policy of minimal recruitment, continuedthrough the 1980s and into the 1990s but by 1995, very fewpeople remained who were old enough to be eligible for earlyretirement, and other measures – such as more extensivetraining programmes – had to be introduced.

The reality of the situation during the 1990s is thatcoal-industry employment in the Ruhr coalfield fell fromover 95,000 to around 53,500, in the Saar from 19,200 to11,300, in the Aachen coalfield all 7700 jobs were lost andemployment in the Ibbenbüren mine fell from 3750 to 2650.These figures include both miners and other workers directlyinvolved in the industry, but not indirect employment such asequipment and service suppliers (Statistik derKohlenwirtschaft, 2000).

5.2.2 Lignite

The year before German reunification, 1989, the GDR’slignite industry employed 139,000 people; by 1998, theeastern German workforce had been reduced to 13,500 andby the end of 2000, to around 10,100. The most significantreduction in manpower came in the early 1990s, whenTreuhandanstalt was preparing the principal producers forprivatisation: some 60,000 people left the industry between1990 and 1993. However, it is important to recognise that byno means all of these were forced into unemployment: earlyretirement was introduced for those over 55 years of age(compared to the normal retirement age of 65 in the former

GDR), many people were transferred to other companieswhen these were spun out from the lignite kombinats, andthere were major government initiatives for environmentalrehabilitation of the old lignite mining areas that providedalternative employment for former mining kombinatemployees. For example, between 1990 and 1994 in theLusatian mining district, alternative employment was foundfor 49,800 people out of 60,000 affected by thereorganisation process; 10,200 had to enter the free jobmarket (Höhna, 1995).

A significant feature of the restructuring process in theeastern German lignite industry has been the change in theage structure of the workforce. With the introduction of earlyretirement programmes, selective laying-off of those mostlikely to find alternative work, and a virtually complete haltto the recruitment of young trainees, few amongst theremaining workforce are aged either over 55 or under 30.While helping to solve the initial commercial problem ofover-employment within the industry, this will clearly havelonger-term effects unless managed recruitment is restarted.


The concept of the ‘employment company’(Beschäftigungsgesellschaft) has been used in both the hardcoal and eastern lignite mining districts as a means of helpingthose affected by the loss of coal industry employment.Established as autonomous bodies, and generally operated byboth industrial companies and local authorities, theseorganisations provide training and employment on atemporary basis, usually while the individual concernedeither seeks another job or is waiting to reach retirement.Their use was particularly valuable in the eastern länderwhere, under the title Gesellschaften für Arbeitsförderung,Beschäftigung und Strukturentwicklung (work promotion,employment and structural development companies), theyprovided a safety net for those laid off during the initialeconomic transition process (Franz, 1994). These commonlytook the form of reconstruction companies that were taskedwith cleaning up the environmental damage resulting fromprevious lignite mining operations.

Another feature of German employment law is therequirement for companies to establish social plans underwhich any restructuring is negotiated with their workforcerepresentatives (Works Council). The social plan coversconditions for matters such as transfers within and outsidethe company, severance payments, retraining, early retirementand continued rights to company housing. Used throughoutGerman industry, these measures are designed to minimisethe social and economic impact of any sudden change inbusiness fortunes including, in the case of the hard coalindustry for example, the need for long-term capacity andemployment reductions (Franz, 1994).

5.3.1 Hard coal

Regional policy is the responsibility ofGemeinschaftsaufgaben (joint federal-länder partnerships),


Germany

which from time to time have instigated specific assistanceprogrammes for areas that have suffered through the loss of amajor, or dominant industry. Such programmes were createdfor former shipbuilding and steelmaking districts, and for thecoal industry, as in the early 1990s for the Aachen-Jülich area(EU, 1998). During the 1990s, these programmes wereextended to cover wider areas that were affected by coal andother sectoral decline, rather than focusing on the impact onspecific communities. The main objective of theseprogrammes has been to create alternative employmentopportunities in the affected areas.

The cornerstone of long-term change in the hard coalindustry, working within the overall programmes set out bythe federal and länder governments, has been RAG itself, inthat its very establishment in 1968 was aimed at adjusting theexisting production capacity to meet the sales potential. Thisconcept remains, although the means of achieving it havebeen modified several times in the face of changing marketconditions. Key criteria include the provision of ‘sociallyacceptable’ systems to handle job losses (Hessling, 1995).The company’s diversification programmes are discussed inmore detail in section 5.6 (below). Pivotal to the company’ssuccess in implementing the concept of social acceptabilityfor its former staff was the creation of the position of‘Director for personnel and social matters’ at each operation,a move requested by the principal mining industry tradesunion (Franz, 1994). Other activities include real estatehandling, one of its subsidiaries,Montan-Grundstücksgesellschaft, being responsible forproviding former mining sites, no longer needed by thecompany, for rehabilitation and redevelopment.

German mining law requires coal producers to carry outinitial remediation of their former mine sites, after whichthey can be made available for alternative uses. Typicallysuch sites are subsequently acquired by one of the regionaldevelopment agencies; in the Ruhr, for instance, theLandesentwicklungsgesellschaft Nordrhein-Westfalia (LEG)and the Eastern Ruhr Development Agency (EWA) fulfil thisrole. EWA was established in 1992 as a partnership betweenthe land government, LEG, local chambers of commerce andsome major employers in the eastern Ruhr with the aim offacilitating the transformation of derelict mine land toalternative commercial use (Esterman andRoxlau-Hennemann, 1995). The agency’s brief includes:● project preparation; ● coordination of reclamation;● project organisation preparation;● coordination between projects within the region;● monitoring project performance;● marketing reclaimed land and sites.

Given responsibility by the land government for overseeingstructural change in the former mining areas, EWA takesformer mining sites after the initial phase of rehabilitation hasbeen completed by RAG and progresses them to a state wherethey can be successfully returned to alternative industrial use.There remains, of course, the potential for some overlap (orshortfall) between RAG’s and EWA’s activities.

Meanwhile LEG in its own right has invested substantially in

buying disused mine land for conversion to other uses. Underits Ruhr Action Programme, which began in the early 1980s,the land government budgeted some DM100 million per yearfor land purchase and rehabilitation, not only for industrialuses, but also for leisure and housing purposes. To this end,in the 1980s LEG administered the Ruhr Property Fund,which provided financing for community-based regenerationprojects, often in conjunction with EU support (Esterman andRoxlau-Hennemann, 1995). The outcome of such schemescan be seen in projects such as the International BuildingExhibition at Dortmund, a national garden show (comparableto those established in other countries on former industrialsites) at Gelsenkirschen, and a cultural centre at the formerZollverein coking plant site in Essen (Wagner, 2000). LEGessentially took over from the former land organisation,Deutsche Steinkohlereviere GmbH, which operated between1966 and 1998 with the responsibility for returning minelands to alternative use. Although some 4000 ha werereclaimed during this period, the time frame for individualprojects (from planning to completion) was typically aroundten years, much longer than would be acceptable today(Wagner, 1995).

Other organisations that have particular areas of interest ineconomic regeneration in the Ruhr area include theKommunalverband Ruhrgebiet (regional planning), theInitiativkreis Ruhrgebiet (attracting inward investment) andthe Gesellschaft für Wirtschaftsförderung (economicdevelopment in Nordrhein-Westfalia). Similar organisationsin the Saarland include the Gesellschaft fürWirtschaftsförderung Saar, responsible for attracting inwardinvestment into this region (IMCL, 1998). Saarbergwerkealso operates its own employment agency service, using itslocal knowledge to assist former miners in finding new work.

Comparable measures were also instigated for the Aachencoalfield during the final mine closures there. The operatingcompany, Eschweiler Bergwerks Verein (EBV) (then an RAGsubsidiary) established the Beteilungsgesellschaft AachenerRegion (BGA) to develop other non-mining activities in thecoalfield. BGA’s portfolio included metals, buildingmaterials, plastics, real estate and services, the company’saim being to develop the district’s other resources – bothphysical and in terms of technology – in conjunction withorganisations such as Aachen University (Franz, 1994).

5.3.2 Lignite

Privatisation of the two principal lignite producers in easternGermany, LAUBAG and MIBRAG, was initially theresponsibility of the Treuhandanstalt agency, which operatedfrom 1990 to 1994. Environmental responsibilities incurredby the former kombinats were transferred to a federalcorporation, Lausitzer und MitteldeutscheBergbau-Verwaltungsgesellschaft (LMBV), which is alsoinvolved in the reclamation of industrial areas for future use.The establishment of companies specialising inenvironmental rehabilitation, often from businesses that hadbeen spun off from the kombinats, was followed in 1994 bytheir sale to the private sector. Coordination of theenvironmental renewal programme is carried out by a


Germany

committee that includes representatives from the federal andstate labour, environment, finance and economics ministries,with advice on regional issues provided by local councils(Debriv, 1999).

In addition to its environmental cleanup responsibilities,LMBV took on Treuhandanstalt’s tasks through continuingthe privatisation of business units, managing lignite miningoperations for which privatisation was not required (aresponsibility that ended in 1999), and the management andsale of former mining industry property. It has also beeninvolved in training, especially for young people, such thatsome 20% of its 2,450 workforce comprises apprentices andtrainees.


As a founder signatory to the ECSC treaty, Germany has hadlong-term benefit from the provisions of the ECSC funds, inparticular in relation to the employment implications ofrestructuring in the hard coal sector. In addition, both theRuhr and Saar areas have Objective 2 status for assistancefrom the EU’s regional development and social funds, andduring the 1990s received considerable support through theRECHAR programme. RECHAR support to Germanytotalled ECU81.3 million (US$100 million) during the firststage of the programme (1990-1993) and a further ECU184million (US$230 million) between 1994 and 1999.

One of the main benefits received by the German hard coalregions over the years has been European Commissionapproval for the federal government’s restructuringprogrammes. The most recent phase of the restructuring,which was agreed between the various domestic partiesinvolved in 1997and received EU approval at that time,provided for the authorization of coal aid until 1999. EUapprovals for 2000 and 2001 were granted subject to theobligation to allocate a larger part of the aid as operating aidfor mines to be closed in the long term – after 2005.

EU assistance to the eastern German lignite region has beenmuch less than that provided to the hard coal areas in thewest. The ECSC treaty covers only activities that areperipheral to lignite mining, such as coke-making andbriquetting, so that assistance to the eastern länder has onlybeen available to offset the impact of the closure of cokeworks and briquette plants. On the other hand, the whole ofeastern Germany has Objective 1 status for EU regionaldevelopment funding, providing substantial assistance to theregion as a whole but not to the lignite-mining areasspecifically.


5.5.1 Hard coal

Since the 1970s, early retirement has been the principal toolused by the mining companies to reduce their workforces

where the people concerned would have otherwise have hadproblems finding alternative jobs. In the period from 1972 to2000, an estimated 120,000 former mine workers took earlyretirement, with an annual average of 4000–6000 taking thisoption. Since 1998, the rate has been much lower, witharound 2000 people per year – mainly from the Saarcoalfield, where the different structure of the industry beforethe amalgamation of Saarbergwerke into DSK meant that theworkforce was typically older than in the Ruhr.

Early retirement has been available for underground workersfrom the age of 50 and for surface workers from 55. The firstfive years of early retirement benefits are paid by the federaland länder governments in the form of readaption assistance,with monthly payments in the order of DM3200 (US$1600)for former underground miners and DM2550 (US$1330) forsurface workers. After five years, recipients progress to thenormal miners’ pension scheme, which provides slightlyhigher income than before, and about one-third more thangeneral workers’ pensions. The aim is for retired ex-miners toreceive between 80% and 90% of their former net salary.Those taking early retirement also receive a lump-sumpayment of up to DM60,000, the exact amount depending ontheir length of service.

Since the early 1990s, with fewer ex-miners eligible for earlyretirement, training has become increasingly important as ameans of providing a ‘socially acceptable’ way of findingnew work. Since 1995, RAG employees affected by mineclosures or amalgamations can receive training from thecompany aimed at providing the skills needed for alternativeemployment, or for transferring to one of its own non-miningsubsidiaries. In some cases, training is tailored to the specificrequirements of new employers, such as the German railwaysystem. There is also a partly government-funded ‘crafts’training programme under which ex-miners can obtain‘hands-on’ vocational training in new trade skills; after sixmonths in what is effectively ‘later-life apprenticeship’,trainees can either move to their new trade or return to RAG


Germany

for alternative retraining. Trainees are eligible for a lump-sumpayment of between DM30,000 and DM36,000, dependenton the length of service.

Around 60% of those choosing this scheme are successful infinding appropriate alternative employment, with thegovernment providing a salary ‘top-up’ over the first twoyears of the new job to compensate for what are typicallylower wages than in the mines. Financing for retraining isprovided through RAG’s social plans and from the federalgovernment’s employment department. Training facilities areoften also provided by RAG. The situation in the Saarland issomewhat different on account of the region’s poor financialstanding relative to Nordrhein-Westfalia: the land onlycontributes towards early retirement, and does not supportretraining programmes to the same extent.

Of lesser significance, although used during the 1980s and1990s, has been the concept of permanent ‘short-timeworking’, in which miners chose not to work for specificperiods and were compensated in part of the loss of earningsby the state. A time limit of two years was imposed onparticipation in such schemes, usually immediately beforeearly retirement. The disadvantage of this approach was thatit only delayed the inevitable in respect of reducing overallemployment (Beenken, 1995).

5.5.2 Lignite

The principal thrust of the initial preparation for privatisationof the eastern Germany lignite-producing companies involveda rapid reduction in non-core employment. While olderpeople were offered early retirement, or were able to transferto either industrial pensions or incapacity benefits, and othershad the opportunity to remain with companies that had beenspun out of the kombinats, there remained a substantialnumber of ex-mining company employees for whomunemployment appeared the only choice. Typical pension

Table 6 Employment restructuring in the eastern German lignite industry, 1991-1999 (Statistik derKohlenwirtschaft, 2000)

Employment options 1991 1992 1993 1994 1995 1996 1997 1998 1999

Left under contractual notice– by the enterprise 11,975 5,946 8,065 3,942 2,316 1,154 637 100 378– under rationalisation 0 6,860 5,286 360 847 725 495 1,289 485– by the employee 4,462 2,398 1,830 31 26 107 8 1 6

Contract termination 0 0 0 0 0 3,038 477 402 124

Early retirement 4,326 1,703 0 0 0 48 250 228 450

Pension 341 23 2 0 1 0 0 0 1

Invalidity benefits 454 76 22 18 26 8 15 7 6

Death 244 173 99 58 55 36 29 14 14

Other reasons 5,314 2,746 1,127 2,244 1,261 568 326 189 151

Total 27,116 19,925 16,431 6,653 4,532 5,684 2,237 2,230 1,615

benefits of between DM1500 and DM2500 per month areintended to provide an income equivalent to around 70% of theformer net salary. Treuhandanstalt was also able to provide alump-sum of DM5000–10,000 per person through its socialplan funds. Table 6 provides a breakdown of the number ofpeople who were affected by the reduction in employment inthe eastern German lignite industry between 1990 and 1999(Statistik der Kohlenwirtschaft, 2000).

In an attempt to offset this, between 1990 and 1992 the federaland länder governments funded major job creation initiativesthat provided some protection from long-term unemploymentfor around 400,000 people who had lost their former jobs.Specific conditions attached to the schemes were thatparticipants had to have been unemployed for 12 months ormore, and that the work provided did not replace existing jobs.In return, the authorities subsidised up to 90% of theemployee’s salary, a programme that was budgeted at someDM1500 million annually for the first five years. Of particularsignificance to the mining sector, a considerable proportion ofthe jobs so created involved environmental rehabilitationprojects on former mine sites, and were largely taken by ex-miners (Weider, 1995). The ‘Stuba’ environmentalrehabilitation programme was later extended to 2002, with afurther budget of DM12,000 million split between the federaland länder governments on a 75:25% basis (MJ, 1994).

Despite the major reductions in direct mining industryemployment that occurred during the 1990s, the sector stillplays a significant role in maintaining stability in the regionaleconomy. For example, recent studies suggest that theLAUBAG operations alone will provide employment – bothdirectly and with its suppliers – for some 25,000 in the longterm, while an estimated 5000 new jobs have been createdamongst 200 small- and medium-sided businesses that haveeither been spun out of the company or have been establishedduring the 1990s (Debriv, 1999). LAUBAG employs around6000 people directly, while MIBRAG has a workforce of 1900.

5.6 Producer diversification

One of RAG’s key strategies for handling the continuingdecline in the coal sector has been to refocus its activitiesinto other business areas. At the time of its foundation, some98% of RAG’s income was derived from coal mining. Today,around 70% comes from non-coal-mining activities as thecompany has diversified through a deliberate policy aimed atreducing its dependence (and that of Nordrhein-Westfalia) oncoal. In doing so, RAG has created opportunities for around2400 ex-miners from its own workforce to transfer toalternative jobs within the company structure (RAG, 2000b).

While it is inappropriate to go into detail of the company’srange of activities here, RAG subsidiaries operate in thefields of energy provision, specialist chemicals,environmental services, engineering and technology, coaltrading and production overseas, real estate and training. Inthe Saarland, Saarbergwerke has a comparable albeit lessextensive structure, with a similar range of subsidiaries.

One of RAG’s major contributions to creating employment


Germany

opportunities in the former coal-mining communities isthrough its training facilities. Operated by RAG BildungGmbH, these provide vocational training for some 12,000mainly young people annually, both in Germany and in othercountries. Although RAG’s own training requirements for itsmining operations are now small – it recruits between 600 and700 people annually, mainly with trade skills – its third-partytraining facilities provide the wider business community with alevel of pre-apprenticeship training that few small- or medium-sized enterprises would otherwise be able to sustain. Trainingin management and administration is available in addition totechnical or trade skills. RAG Bildung also provides retrainingto ex-miners, with the additional assurance of help in locatingsuitable new employment after reskilling has been completed(RAG, 2000b).

5.7 New employment opportunities

Since the substantial out-migration from the Ruhr (inparticular) in the 1960s and 1970s, the economic situationhas changed markedly. The region is much less dependenteconomically on coal and steel, and the influx of newindustries has resulted in net immigration toNordrhein-Westfalia throughout the 1990s. Having reachedover 15% in the mid-1980s, unemployment is now back tolevels comparable to those throughout former West Germanyat 9–10%. Pockets of much higher unemployment remain,however, within the Ruhr region and in the Saarland. Peoplehave also adapted to longer commuting distances in order tofind appropriate work, sometimes involving cross-bordertravel, as from the Saar to the Smart car plant in FrenchLorraine.

The Ruhr area in particular – being the largest of the coalfieldareas – has received substantial investment in the establishmentof new education and training facilities, ranging fromuniversities to technology and training centres. Schäfer (1995)describes the further education, training and advisory servicesthat have been established in the community of Bergkamen inthe eastern Ruhr, including both private- and public-sectorinstitutions. While in the past these would have specialised inskills specific to coal mining, they now offer a much widerrange of courses that are more appropriate to the diversifiedindustrial economy that is under development in the district.

The success of early retirement as a means of workforcereduction can be largely attributed to the traditional Germanmining industry culture, in which it has been common andsocially acceptable practice for older workers to retire so thattheir younger counterparts can retain their jobs. While thishas been effective in the hard coal sector, the concept hasalso crossed the boundaries into lignite mining as well; whenthe last mines in the Aachen coalfield closed in the early1990s, early retirement in Rheinbraun’s operations providedopenings for younger ex-miners from the hard-coal industryto transfer to the nearby lignite mines.

5.8 Funding levels

The structured approach adopted to diversification in

Germany’s hard coal industry has required huge investmentover many years from the federal and länder governments,from the EU and from the industry itself. The restructuring oflignite mining in the eastern länder has also been a majordrain on government resources, although eastern Germany’sstatus as an Objective 1 area for EU assistance has createdthe opportunity for other sources of funding as well.

Between 1981 and 1991, government assistance to RAGalone totalled some DM27,000 million, in addition torevenues obtained from the ‘kohlepfennig’ – the electricityusers’ levy (Franz, 1994). RAG’s expenditure in 1991 onclosures and redundancies was almost DM1,900 million,while in 1999, the cost to the company for retirement benefitsalone reached nearly DM800 million (RAG, 2000a). Between2001 and 2005, RAG will be using DM200 million of its ownresources each year as internal support for its coal operations,in addition to the state subsidies agreed under the 1997eight-year industry plan. These are scheduled to fall fromDM9,250 million in 1998 to DM5,300 million in 2005 (ICR,2000a). In late 2000, the European Commission authorisedthe levels of state aid for 2000 and 2001. Meanwhile, theoutcome of negotiations between the European Commission,the industry and the German government over the allocationof subsidy funding between operational support and the costsassociated with restructuring is likely to have a significantimpact on both future production levels and how the federaland länder governments are allowed to handle the costsinvolved with further employment cutbacks in the comingyears under European competition law.

Nonetheless, the cost to the public purse of supporting acontinuing planned approach to coal industry restructuringhas to be seen in relation to the potential costs involved inmuch more drastic action to reduce production andemployment. Prognos (1999) estimated the need for publicfunding for mine closure of DM200 per tonne of capacitylost, inferring that the current plan, running from 1998 to2005, presents closure liabilities of DM3200 million.Immediate closure with the loss of some 61,000 direct jobsand a further 59,000 indirect would have cost an additionalDM6000 million, Prognos calculated, with the annual burdenof additional unemployment and other social security benefitscosting the German government DM800 million more thanthe cost of the current, staged restructuring programme.

In terms of EU assistance, Germany received ECU265million from the two phases of the RECHAR programme(1990-1999), with most of the first phase money beingallocated to the hard coal sector but an increasing amountbeing spent in the eastern länder in the later years.


Germany has been unique amongst the western Europeancoal-producing countries in that it has had to handle majorrestructuring of both its hard coal and lignite-miningindustries. Having taken place over markedly different timeframes, and within wholly different structural economicbackgrounds, the two processes have required a distinctly


Germany

different approach. What they have had in common, however,has been the integrated handling of job losses and jobcreation. While the hard coal industry has managed toachieve this over many years, the eastern lignite coalfields arestill working through the process of change within the muchgreater overall economic transition required.

In the hard coal sector, RAG’s establishment in 1968 is seenlargely as an ‘institutionalised crisis managementprogramme’ (Franz, 1994), in that the company structurecould be used as a vehicle for handling the long-termrestructuring of the industry in a socially acceptable way.From this point of view, the concept has been successful,albeit at a huge cost to the German federal and stategovernments. Other significant contributors to the success ofindustrial regeneration in the former mining communitieshave included the consensus achieved between thegovernments, the industry, the trades unions and localbusinesses, and the cooperative tradition that exists within themining industry on a social level (Critcher and others, 1999).The ability of the states most affected – Nordrhein-Westfaliaand the Saarland – to formulate their own regionaldevelopment plans within which coal industry restructuringcan be taken into consideration has also proved to be ofmajor benefit in the long term.

The regeneration of the Ruhr area, for example, has beenplanned for over 40 years, with the Nordrhein-Westfaliagovernment first publishing a regional development plan,covering aspects such as infrastructure improvements,education and training, land reclamation and regionalinvestment promotion as early as the 1960s. Subsequentplans, aimed specifically at regenerating the coalfield areawithin the state, involved the formation of 15 separatesub-regional management authorities, each of which involvedthe participation of all sectors of their local communities(Critcher and others, 1999). Nonetheless, not all of the resultshave been as impressive as would have been wished:unemployment in the some parts of the coalfields remainsunacceptably high, one of the biggest problems being thatfirms are less willing to invest in or relocate to areas with analready high unemployment rate. The position is, of course,significantly better in the western coalfields than in easternGermany as a whole, where unemployment throughout theworkforce remains a major economic and social problemmore than ten years after reunification.

In both regions, the establishment of small- and medium-sized enterprises is viewed as being the best way of creatingnew employment; while this concept was alreadywell-established in the former West Germany, it had to beintroduced to the neue länder after reunification. Notsurprisingly, the first generation of such businesses requiredmuch nurturing in the form of business support. Indeed, thegeneral economic transformation of eastern Germany hasprovided the first real test for the institutions andprogrammes established for this purpose, and much can belearnt from their successes and failures about the mostappropriate polices that need to be adopted for ‘specialstatus’ regions such as this.

Significant conclusions that can be drawn from coal industry

restructuring experience in Germany since the late 1950sinclude:● cooperation between all of the parties involved is

essential for restructuring to be successful;● the use of ‘social plans’ and the mandatory establishment

of works councils in which major corporate policydecisions can be discussed appears to have been verysuccessful in making those most affected feel involved aspart of the decision-making process;

● the autonomy provided to the state governments by thefederal system in relation to regional planning has beenof major benefit to the areas most affected byrestructuring in the hard coal sector. The situation ineastern Germany is less clear, given the continuinggeneral economic restructuring that is taking place;

● despite this, the individual länder remain vulnerable toeconomic influences beyond their control. Market forcesand the corporate priorities of multinational companiesthat have established plants within the coalfield areasmay change, and state governments are thus less able tocarry out structural planning within a firm long-termeconomic framework;

● early retirement proved to be the most useful tool forreducing the workforce until such time (the early 1990s)that few miners remained who would be eligible in termsof age;

● in this context, short-time working also assisted byreducing coal output, but only delayed the take-up ofearly retirement benefits;

● corporate diversification has proved to be a useful meansfor developing alternative employment in former miningcommunities. By 1999, for example, RAG employedover 100,000, of whom only 60,000 were involved incoal mining, while EBV and Saarberg have alsoundertaken diversification programmes that haveprovided alternative opportunities both for theirworkforces and for the next generation;

● in eastern Germany, the environmental legacy of formerlignite mining operations has provided workopportunities for a substantial workforce. The costs ofthese programmes – over DM7500 million between 1993and 1997, and continuing – have, however, been borneby the federal and länder governments;

● the fragmentation of former kombinats in easternGermany has led to the development of numerous small-and medium-sided businesses. However, these neededextensive management and financial support until theycould become self-sufficient, and it is not known whatproportion of these enterprises succeeded in the longerterm; and

● focused investment in educational facilities, ranging fromtraining centres to universities, helps to create a businessenvironment in which ‘high-tech’ companies can becomeestablished in the confidence that the available workforcehas the skills that they require, and that there areopportunities for developing close relationships with theresearch facilities in the region. While this approach mayprovide only limited prospects for those immediatelyaffected by coal industry restructuring, it does addressthe longer-term needs of the next generation within theworkforce.


Germany

6 The Netherlands


The Netherlands was the first Western European country toclose its coal-mining industry completely. Industrial-scalecoal production dated only from the early years of the 20thCentury, exploiting reserves contained in the coal measuresthat lie in a belt from northeastern Belgium through into theAachen area of Germany (see Figure 2). Within what hadbeen an essentially rural environment, coal industrydevelopment brought a rapid expansion of the region’sindustrialisation, with a ten-fold increase in populationbetween 1900 and 1950. The South Limburg regionremained, however, largely isolated from the remainder of thecountry geographically and in terms of communicationslinks, a situation that was an important factor in the way inwhich the programmes introduced to assist its economicredevelopment were planned and implemented.

The mine closure programme took place between 1965 and1974, with a major economic regeneration packageimplemented between 1975 and 1990. This chapter reviewsthe way in which the closure programme was scheduled, thesubsequent investment in rehabilitation and infrastructuraldevelopment, and the long-term outcome. It should be notedthat few contemporary sources of detailed information arenow available about the earlier stages of the project; inconsequence, this chapter can only provide a brief overviewof the measures put in place. An economic study of the mineclosure and regional regeneration process was prepared byDerks (1990), which includes a significant amount ofbudgetary information about the programme.


Faced with rising production costs and a decline in domesticcoal demand resulting from the discovery of natural gas onland and in the Dutch sector of the North Sea, in 1965 theDutch government decided to close the coal industrycompletely. Concentrated exclusively in the South Limburgregion, at that time the industry was partly in state ownership,through the Dutch State Mines (DSM), with the remainder inthe private sector. From an output of 10 Mt and a workforceof more than 45,000 in 1966, coal production ceased at theend of 1974 following a structured programme that involvedthe sequential closure of mines from both the public andprivate sectors. Table 7 shows the production andemployment trends during this period, as reported in relevantissues of Mining Annual Review (MAR,1968-1973; Rasch,1974, 1975).

In order to minimise the social and economic impact of theclosure programme on South Limburg, in 1965 eight of theregion’s municipalities (four of which hosted coal mining)established a cooperative association, the OostelijkeMijnstreek (Eastern Mining District) with the aim of devisinga structural master plan for their future economicdevelopment. This initiative coincided with the publication ofa report commissioned by the Limburg provincial

government, containing an inventory of the former minelands and proposals for their redevelopment. This was thensubmitted to the Dutch national government for negotiation,following which agreement was reached on the level ofcentral government funding that would be provided. In 1975,the eight municipalities established a second association, theSanering Mijnterreinen Oostelijke Mijngebied (SSO, orCooperative Association for the Clearance of Mine Sites inthe Eastern Mining Region), which was given overallresponsibility for the management of environmentalrehabilitation, infrastructure development and other aspects ofthe regional regeneration project. A single consultancy, HPProjektpromotie bv, was awarded the technical and financialcontrol contract for the work (van de Kraats, 1997a).

The environmental rehabilitation programme (entitled ‘Black-to-Green’) only began once the last mine had been closed atthe end of 1974. The work involved the demolition of thecoal industry infrastructure (buildings, rail lines and powerstations), and the removal or landscaping of waste tips andslurry ponds, together with the construction of new roads, raillinks, industrial facilities and other commercial infrastructureaimed at bringing new employment to the area. In thiscontext, leisure amenities formed a major focus for theredevelopment. As such, the environmental improvements didnot themselves offer substantial new employment, but theoverall intention was to make the former mining area asattractive as possible in both visual and infrastructural termsfor new businesses to relocate here (van de Kraats, nd).

6.2 Social impact

At the time that the mine closure process began in 1965,some 75,000 people (or around 30% of the total activepopulation in South Limburg) relied on the industry eitherdirectly or indirectly. During the early closure period(1965-1972), an initial peak in unemployment of around 6%was quickly reduced as ex-miners found work in industriessuch as construction. There was also a considerable

Table 7 Annual production and coal industryemployment in the Netherlands,1966-1975

Year Production (Mt) Employment

1966 10.0 45,0001967 8.11968 6.71969 5.61970 4.3 13,0001971 3.81972 2.91973 1.7 4,7001974 0.81975 0 0

‘commuter’ population serving the construction industry inGermany at that time. Despite the initial intention voiced bythe national government that there would not be any closuresof mines without replacement by new jobs, by the time thelast mines were being shut, unemployment in South Limburghad risen markedly above the national average, onlyapproaching convergence once again at the beginning of the1990s. At its worst, during the mid-1980s, officialunemployment reached levels of around 20%, having beenover 10% since the mid-1970s but exacerbated by generaleconomic recession during the early 1980s. Unemploymentin the region is now low, about 1% higher than the Dutchnational average, with virtually total employment amongstthose groups that form the core workforce. Unemployment inSouth Limburg is also markedly lower than in theneighbouring former coalfield districts of Belgium andGermany (Vermeulen, 2001).

Figure 14 shows the general trends in employment in theregion and the Netherlands as a whole during the period1965-1990, while Table 8 shows the widening gap between


The Netherlands

the active population and the available work by sectorbetween 1963 and 1983. Much of this gap during the periodcan be attributed to the loss of mining-sector jobs.


The reconversion of South Limburg following the closure ofthe coal industry was largely dependent on centralgovernment funding. Of the three main tiers of government inthe Netherlands – central, provincial and municipal – muchof the initial dialogue was conducted between centralgovernment and the municipalities; it was only later that theprovincial government took a more proactive role in theregeneration process. As a member of the SSO, it nonethelessprovided support to the municipalities during theirnegotiations with central government and assisted inattracting inward investment to the region through its ownprogrammes.

The lead department for the central government was theMinistry of Housing and Town Planning, which already hadschemes in existence to provide partial funding for therehabilitation of housing. Although the concept of purchasingrehabilitated land for new housing projects was not quite thesame, the ministry was able to make funding available so thatformer mine properties could be bought, and then transferredto the municipalities.

In 1975, the government created the Limburg InvestmentBank (LIOF), a regional development agency with theresponsibility for providing financing both for newenterprises and for those already established in SouthLimburg that required funding for expansion projects.Between 1975 and 1988, the LIOF invested some Fl 150million (around US$50 million in current money) in suchventures, while at the same time over Fl 410 million wasattracted to the region in foreign direct investment(Federman, 1988).

10

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'75'74'73'72'71'70'69'68'67'66'65 '88'87'86'85'84'83'82'81'80'79'78'77 '90'89

Decision taken to stop coal extraction

Worseningeconomicoutlook

Oil crisis

Last coalpit closed

Economic recovery

Difference betweenregion and nation

Limburg

The Netherlands

Figure 14 Unemployment trends in South Limburg, 1965-1990 (Derks, 1990)

Table 8 Employment by sector in SouthLimburg, 1963-1983 (Vermeulen, 2001)

Sector 1963 1973 1983

Agriculture 15,000 8,000 7,000Coal mining 49,000 7,000 0Industry/construction 86,000 94,000 75,000Services:– private-sector 70,000 94,000 100,000– public-sector 20,000 23,000 32,000

Total 239,000 227,000 213,000

Active population 244,000 247,000 275,000

Employment gap 5,000 20,000 62,000


As one of the founder members of the ECSC, theNetherlands was able to benefit from assistance during themine closure programme. The European Community did not,however, provide funding for the regional reconversionprocess.

South Limburg was designated an Objective 2 area forassistance under the European Regional Development andSocial programmes in 1988-1989, and had retained this statusin early 2001. However, given the economic progress made inthe area during the 1990s, it is unlikely that it will continueto receive EU support after the current programmes expire in2006-2007 (van de Kraats, 2001).


An estimated total of 49,600 people were directly affected bythe mine closure programme. Of these, some 24,400 – or49% – left the workforce during the period 1965-1975through retirement, early retirement and out-migration, orthrough social work provision schemes that providedsubsidised employment for those who would have otherwisebeen unable to participate in the general labour market, oftenfor reasons of invalidity. The remaining 25,200 peoplerequired new jobs (Vermeulen, 2001).

Of the total of 24,400 who left the labour market, 8700 tookretirement and a further 8100 early retirement at the age of55 for underground workers. Some 4400 left the areacompletely, a proportion of these being migrant workers,mainly of Polish or Italian origin. Social work provisionswere made for 3100.

Help was provided for ex-miners to find alternative work.Miners under the age of 35 were not initially encouraged toseek alternative employment, since the staged closureprogramme required continuing manpower. Those betweenages 35 and 55 were offered redundancy, with a lump-sumpayment where this was compulsory. Other provisionsincluded temporary supplements to wages from newemployment where these were lower than had been receivedin the mining industry, financial assistance for retraining, andfinancial assistance during the transition between jobs (vande Kraats, 2000).


Despite losing its coal mines, DSM remained – and stillremains – a major employer in the region, havingtransformed into an international chemicals company, andinitially accounting for some 6000 new jobs for its ex-miningworkforce. While this figure later rose to 12,000, it nowemploys some 7000 in its South Limburg operations.

Central to the region’s attempts to attract new investment wasthe decision to carry out a ten-year rehabilitation programmethat encompassed the removal of most of the visible evidence


The Netherlands

of the former coal mining industry, environmentalimprovements and the creation of new infrastructure – roads,rail lines and development of the regional airport – togetherwith a substantial amount of new housing. There was also anearly scheme aimed at improving telecommunicationsthroughout the area. The contracts for much of theenvironmental rehabilitation work were let to a joint venturecomprising companies that had lost business with the closureof the mines, so providing an alternative revenue source aswell as employment opportunities in construction.

Other major local employers include car assembly at theDAF (now Volvo) plant in the region, as well as theproduction of specialised medical equipment. However, themost significant early boost to employment in South Limburgcame with the Dutch government’s decision to move theoffices of the country’s Central Bureau of Statistics (CBS)and the Civil Service Pensions Administration (ABP) to newpremises in Heerlen: between 1973 and 1983, some 9000new public-sector jobs were created. The government alsoinvested in several new academic and research institutes,including the Open University and technical schools, with theaim of attracting further high-tech industries to an area inwhich there was already a strong research tradition.

Between 1965 and 1977, 11,300 new jobs were created inSouth Limburg: the public sector provided an initial 3900 andthe private sector 4500, with a further 2900 places created onsocial work programmes. Between 1978 and 1990, a further5800 jobs became available, with additional employmentcreation continuing during the 1990s as the economicregeneration of the region continued (Derks, 1990).

6.7 Funding levels

Government provision for the closure programme includedcontinued subsidisation of production, funding for the closureactivities, and additional contributions to the miners’ pensionfund to cover the early retirement programme. Totalexpenditure reached some Fl 1770 million (equivalent toFl 6100 million or US$3000 million in 2000 money), ofwhich the ECSC contributed some Fl 360 million (US$180million) (van de Kraats, 2000).

The ten-year ‘Black-to-Green’ programme (1975-1985)required an investment of around Fl 1,000 million (US$1700million in 2000 money) for the clearance of old mine sitesand the construction of new infrastructure, industrialpremises, office space and housing. Of this, the centralgovernment contributed some Fl 123.5 million, with theremainder being recouped through the sale of restored landfor building and construction.

Taken on a per-period basis, government expenditure on theSouth Limburg programme totalled Fl 8,700 million in 2000money (US$4,350 million) between 1965 and 1977, and afurther Fl 6,500 million (US$3,250 million) between 1978and 1990. Table 9 lists some of the cost centres under whichthese amounts were spent (Derks, 1990). No breakdown isavailable regarding the proportion of this investment that wasderived from EU regional development funding.


In overall terms, the Dutch mine closure programme affectedfar fewer people than did coal industry restructuring inFrance, Germany or the UK. However, in terms of theproportion of the working population within South Limburg,coal industry closure had a major impact on the communitiesmost affected. The response was to carry out a regionalrehabilitation programme that not only removed the scars leftby coal mining, but also provided a solid foundation for thedevelopment of new employment.

The way in which the closure programme, and thesubsequent environmental and infrastructural renewal wascarried out owed a great deal to the ability of all of theparties involved – government at various levels, the miningindustry trades unions and the private sector – to worktogether within a clearly defined project structure in whichthe aims were prominent from the outset. Despite these cleargoals, South Limburg still suffered a level of economicdecline that was greater than that of the Netherlands as awhole during the 1980s, and it was not until the early 1990sthat official unemployment statistics for the region and thecountry as a whole approached convergence once again. Inearly 2001, South Limburg has only slightly higherunemployment than other areas in the Netherlands, and islikely to lose its enhanced status for EU funding in the nearfuture.

Even though the picture at face value is one of successful jobreplacement for both those immediately affected by the mineclosures and the next generation, some indicators do remainof the earlier social and economic implications for thecommunities involved. For example, South Limburg is hometo an abnormally high number (25% more than in theNetherlands as a whole) of people claiming invalidity benefit,a situation that, as in the UK, masks the real level of


The Netherlands

joblessness in the region. There are also higher numbers ofpeople on subsidised work programmes, inferring that this isperhaps becoming a ‘tradition’ since most of those who werefirst taken on to these schemes would have reachedretirement by now. In addition, even in a situation wherethere is effectively full employment, there remains adisturbing undercurrent of social problems in the largercommunities, although there is no clear link between this andthe demise of the coal industry.

Significant conclusions that can be drawn from the Dutchexperience during the 35-year period between 1965 and 2000include:● the ending of mining resulted in the loss of some 49,000

direct jobs and a total of around 75,000 overall,representing 30% of the regional labour force;

● of those directly affected, roughly equal proportions leftthe labour market through retirement or other schemes,and had to find alternative work;

● the central government provided a major boost to thelocal employment market by moving the nationalstatistical office and the civil service pension fundadministration to the area;

● the coordinated approach presented by the localmunicipalities was a key factor in their successfulnegotiating approach with central government forfunding the closure and regional redevelopmentprogrammes;

● there was a clear strategy aimed at improving theenvironment, the regional infrastructure and the qualityof life within local communities. A firm deadline wasalso set for the completion of the main part of theproject;

● advantage was taken of the removal of mine sites – oftenfrom within existing communities – to improve theoverall town and regional planning structure;

● investment was deliberately targeted at educational,research and other hightech sectors, with the aim of

Table 9 Government funding for the South Limburg mine closure and reconversion programmes,1965-1977 and 1978-1990 (Derks, 1990)

Cost centre NLG million Equivalent in 2000 money Fl (Fl/US$ million)

Period 1965-1977, covering the mine closure programmeOperating subsidies 1,664Grants, work programmes, infrastructure development, etc 1,412Total 3,076 Fl 8,700/US$4,350

Period 1978-1990, covering the regional regeneration programmeCommercial sector support 142Economic infrastructure 292Construction and labour market 88Welfare 12Co-financing for EU programmes 2Sub-total 535

Investment in reconversion 3,421(including investment incentives for new businesses and expansions) 1,656

Total 3,956 Fl 6,500/US$3,250

attracting this type of employment to what had been aheavy industrial area for much of the 20th Century;

● despite long-standing aims to attract small- andmedium-sized enterprises, South Limburg still remainstoo dependent on large employers which, in the modernmultinational corporate environment, increases thepotential risk for the employment market;

● a significant shortcoming of the planning in the earlystages of the reconversion programme was inadequateprovision for creating jobs for the next generation as wellas for those who had been directly affected by the mineclosures. In consequence, when the Dutch economy wentinto recession during the 1970s and 1980s, youthunemployment became a serious concern; and

● even with a structured plan in place, economicreconversion took some 25 years to achieve, partlybecause economic growth in the 1970s and 1980s wasmarkedly lower than that experienced in the ‘boom’years of the 1950s and 1960s. Furthermore, even by2001 the loss of coal industry jobs has still not beenworked out of the labour market, with relatively highnumbers of invalidity benefit claimants and peopleworking under protected welfare schemes.


The Netherlands

7 Spain


Spain has been a medium-capacity coal producer for much ofthe last 200 years. Hard coal resources are concentrated intwo main areas; the Asturias-León region in the north and theBadajóz-Cuidad Real basin in south-central Spain (seeFigure 15). Lignite resources, meanwhile, occur inconcentrated in and to the southeast of the Pyrenees, and inthe far northwest near La Coruña. After trending graduallydownwards during much of the period 1950-1975, coaloutput rose dramatically during the late 1970s and early1980s, led by a substantial increase in lignite production asthe Spanish government sought to reduce nationaldependence on oil imports. Until 1975 and the restoration ofmultiparty democracy, the Spanish state was heavily involvedin the administration of heavy industries, including coal

mining, and the pricing structure for energy products. Thiscentralised approach was subsequently abandoned, and thecountry’s admission to the European Union in 1986 broughtwith it the benefits of and constraints imposed bymembership of the European Coal and Steel Community.

During the 1990s, coal production fell from 36 Mt (14.9 Mthard coal plus 21.1 Mt lignite) in 1990 to 25.4 Mt (15.0 Mthard coal plus 10.4 Mt lignite) in 1999. Hard coal productionbetween 1960 and 1999 is shown in Figure 16. In 1998, thegovernment introduced the most recent in a series of nationalcoal plans, providing the framework for both production andemployment during the period 1998-2005. This visualises acontinuing reduction in both areas, the situation beingcomplicated further by the negotiations that took place in thelate 1990s between the Spanish government and theEuropean Commission over the level and funding process forthe substantial subsidies that the hard coal industry requiresin order to maintain production (ICR, 1997a).

With some operations in the northeast of the country alreadyclosed, Spanish lignite production is likely to continue todecline as the principal alternative source, the Puentes deGarcia Rodriguez mine near La Coruña, gets closer toexhaustion. Prediction of the future for the hard coal sectoris, however, more complex, and will depend exclusively onthe government’s ability to continue subsidisation to both thepublic- and private-sector producers within the framework ofEU competition regulations. In view of the greater socialimplication potential, this chapter looks at the situation in thecoalfields where the state company, Hulleras del Norte SA(HUNOSA), is centred, and at the programmes beingimplemented to offset the loss of jobs caused in the Asturiancoal-producing heartland around the city of Oviedo. Whilesome precedents already existed (for example, the case ofmine workers made redundant when the lignite producer,Carbones de Berga, closed its operations in the Pyrenees in1991), these had been one-off cases involving far fewerpeople than have been affected by the reduction in coalmining in central Asturias (Franz, 1994).


Hard coal is produced in Spain by both public- and private-sector companies. HUNOSA was founded in 1967 throughthe state acquisition of the assets of a number of bankruptprivate-sector producers in the northern province of Asturias.In common with the steel industry in northern Spain, whichhad already been nationalised in the 1950s, state ownershipof coal production was seen as a way of maintainingproduction as well as reducing the risk of social tension inwhat has traditionally been a strongly militant industrial area.

HUNOSA’s operations lie to the south and southeast of theprovincial capital of Asturias, Oviedo, in the Nalón andCaudal valleys. The region, which is characterised by rugged

Madrid

FRANCE

SPAIN

PORT.

hard coal

lignite

Barcelona

BilbaoLeón

Centro-Sur

Asturias

0 300 km

Oviedo

Galicia

Figure 15 Coalfield areas in Spain

0

2000

Year

(Mt)

1990198019701960

5.0

10.0

15.0

20.0

HUNOSA production

Figure 16 Hard coal production in Spain, 1960-1999(IEA, 2000; Tejuca, 2000)

terrain cut by steep-sided valleys, has a long industrialtradition, having hosted coal mining, coke production andmetallurgical industries along the narrow valley floors. Theprincipal communities, Langreo and Mieres, each withpopulations of around 50,000, present typical aspects ofindustrial decline that has not been adequately offset by thegrowth of alternative job opportunities. Private-sectorproduction in the Principality is centred on the Narcea districtto the southwest, where numerous small-scale producersmaintain limited output.

Asturias is geographically and topographically fairly isolatedfrom much of the rest of Spain, with the province’s naturallines of communication lying along the north coast.Depopulation resulted in the loss of some 25,000 Asturianinhabitants between 1987 and 1997, while economicproblems in the agricultural sector and restructuring of thearea’s traditional heavy industries helped to pushunemployment to 17.3% in mid-2000, considerably higherthan the Spanish average of 14.0% (SADEI, 2000b).

Being of different political persuasions, the Asturian andnational governments do not necessarily see eye-to-eye oversocial and economic issues, especially where these involvepublic-sector employment. This perceived mistrust extends toissues such as the availability and distribution of EuropeanUnion structural funds, which are channelled through thenational government to the regions.

From its formation in 1967, HUNOSA was able to restorecoal production to a maximum of 4.6 Mt in 1972. Since thattime, the trend has been progressively downward, with thecompany achieving an output of 1.9 Mt in 1999. The loss ofjobs during this period has, however, been much moremarked, 19,000 employees having left the industry during the33-year period. Of these, 10,000 jobs were lost between 1991and 1999. The company’s output is included in Figure 16while its employment trends are shown in Figure 17.

Mining conditions in the area are difficult, with steeplydipping seams, often of considerable thickness, offering fewopportunities for introducing the highly productive systemsthat are found in other coalfields of the world. AlthoughHUNOSA has been able to increase the proportion ofmechanised output, labour productivity remains very low byworld comparisons. Production costs of US$45/t at its fewsurface operations provide little offset for the US$135/tincurred in its underground mines. In common with the restof the Spanish hard-coal industry, HUNOSA relies on statesubsidies to remain in business, the company having beenallocated a subsidy of Pta18,132 million (US$90.7 million) in2000, subject to European Commission approval.

During the early 1980s, concerns over energy supply in Spainled the government of the day to promote domestic coalproduction. For example, state investment in the industry in1984 totalled some US$370 million, although this was asmuch for reasons of maintaining employment as improvingits infrastructure (Richards, 1984). The third Plan EnergeticoNacional (National Energy Plan), introduced that year,foresaw continued growth in coal output and made provisionfor continued subsidies, aimed largely at conserving jobs as


Spain

Spain made the transition to full membership of the EuropeanCommunity. By 1987, however, HUNOSA’s losses hadreached the point where plans were being evaluated toimprove its viability through a gradual reduction in itsworkforce, proposals that met initially with fierce unionopposition (Munoz, 1987). During the early 1990s,HUNOSA closed around ten mines, although in productionterms this accounted for only around 1 Mt/y (MAR, 1991),and began a diversification programme.

The Spanish general elections in 1996 resulted in the formerSocialist administration being replaced by a right-of-centregovernment, less willing (but still with little choice on socialgrounds) to follow policies aimed at providing state supportfor the coal industry in general. In 1998 the government,unions, producers and other parties signed a new Coal Plan tocover the period to 2005. The agreement guarantees financialsupport for the coal industry, not only through directsubsidies but also through funding for the development ofalternative employment opportunities in the coalfields, whilesetting a schedule for continued job losses and for decreasedproduction (Espi, 1998). Subsidy levels are agreed with theEuropean Commission on an annual basis, with the currentscheme running until the ending of the ECSC in 2002.However, it is apparent that state aid will be needed beyondthis time, given that the Coal Plan runs until 2005 and thatthe reconversion process has not proceeded quickly enoughto meet this target.

0

2000

Year

Em

plo

ymen

t ('0

00)

5

25

1990198019701960

10

15

20

30

Figure 17 HUNOSA employment, 1967-1999(Tejuca, 2000)

7.2 Social impact

At the time of its formation in 1967, HUNOSA had aworkforce of 18,750; within three years this had climbed to amaximum of nearly 26,600 as the company reorganised theoperations of the former private-sector organisations fromwhich it had been created. Thereafter, employment atHUNOSA has maintained a steady, if occasionally erraticdownward trend. Figure 17 shows the decline in theworkforce since the late 1960s, with a plateau of around21,000 reached during the early 1980s as the Spanish coalindustry benefited from substantial investment aimed at bothsecuring energy supplies and conserving jobs (Richards,1984).

Following Spain’s entry into the European Union in 1986,political pressure increased for the coal industry to becomemore competitive. This is reflected in the resumption ofjob-shedding evident in Figure 17 as HUNOSA undertookreforms outlined in a three-year programme agreed with thegovernment in 1985 (Munoz, 1995), albeit in the face ofstrong union resistance. Further cuts in production during thelate 1980s resulted in continuing shrinkage of its workforce,until by 1991 it had reached a level of 17,500. Union uneaseover the situation remained unabated, and led todemonstrations by miners in Madrid the following year; inspite of this a further 3,200 jobs were lost during 1992.

Between 1991 and 1999, HUNOSA shed virtually 10,000 ofits employees as it closed the least economic of itsunderground operations and came under increasingenvironmental pressure to curtail opencast mining. Taking the32-year period as a whole, the company’s workforce fellfrom 26,600 to 7500, with most of the job losses affecting thecommunities living in and around the Nalón and Caudalvalleys. Already suffering from the loss of other traditionalemployment opportunities, such as the metallurgicalindustries, and with regional agriculture also in decline, thesocial and economic impact on Mieres, Langreo and theirsatellite communities was severe. Nonetheless, employmentin extractive industries remains locally very important; in1998 the municipality of Aller still had over 40% of theworkforce involved in mining (representing 1320 people outof a total workforce of 3180), while in Langreo, one of thecommunities hard-hit by mine mining job losses, extractiveindustries continue to account for 21% (2420 out of 11,530)of existing jobs (SADEI, 2000a).

7.3 The Coal Plan

Agreed between the government and the trades unions, the1998-2005 Plan for Coal Mining and the AlternativeDevelopment of Coal-mining Areas (Plan 1998-2005 de laMinería del Carbón y Desarollo Alternativo de las ComarcasMineras) sets out the framework under which state subsidieswill continue to be paid to producers, albeit at a reducingrate, while both employment and coal output will continue todecline. The plan also includes major investment ininfrastructure development, financial assistance to newbusinesses, and education and training. Renegotiation of theagreement is scheduled for mid-2004.


Spain

The Plan continues an earlier agreement that ran from 1994to 2002. Its basis is European Commission decisionNo.3632/93/ECSC, under which the payment of subsidies toEU member states’ coal industries is allowable for threespecific purposes:● to cover temporary losses while coal producers recover

viability during periods of low international marketprices for coal;

● to offset social and regional problems resulting from apermanent reduction in coal output from producers thathave no chance of ever being viable; and

● to help the coal industry adopt suitable environmentalprotection measures.

The plan also refers to the terms of the 1996 EU directive onthe liberalisation of electricity supply in member countries,which stipulates the proportions of higher-cost domesticallyproduced coal that may be burned in power stations.

Following the rejection of initial terms by the unions in late1996, the revised plan was agreed in mid-1997. Over theeight-year period covered, employment is to fall from 25,000to 18,000, with HUNOSA bearing the brunt of the losseswith a reduction of 3000 out of the 7000 total. However,measures are also included for continued recruitment into theindustry, inferring that a greater number of miners will leavethe industry than the nominal 7000 mentioned. While aguaranteed market remains for domestically produced coal,this is cut from 18.1 Mt in 1997 to 13 Mt in 2005, andoperational subsidies will fall by between 20% and 25%. TheUS$6600 million total cost of the plan includes US$3500million targeted at investment needed to generate newemployment prospects in the coal mining areas (ICR, 1997b).

The requirement for job creation to offset other losses isbased on a formula – overall, mining companies have tocreate four new mining jobs for every 11 lost. This does not,however, apply to HUNOSA, for which there is a specifictarget of creating 736 new mining jobs over the eight years,plus a further 325 in industries other than mining.Furthermore, if the company fails to meet its alternativeemployment target, it has to make up the difference inadditional mining jobs (A Gonzales, 2000). In practice, theincentives being offered by the government to small-scaleprivate-sector companies to close their operations mean thatthe formula is not being adhered to in the manner originallyintended (Garcia, 2000).


Both the national government and the Asturias provincialauthorities have responsibility for coal sector administration,with financial matters being handled by central governmentand technical aspects, including mine safety, under thesupervision of the Principality.

Jointly owned by HUNOSA and the provincial government,Sociedad para le Desarollo de las Comarcas Mineras S.A.(SODECO) was created in 1988 specifically to create newjobs in the areas covered by HUNOSA’s operations. WhileSODECO has responsibility for attracting new investment

into the coal-mining districts, another organisation –Fundación Comarcas Mineras (FUCOMI) – in whichHUNOSA is one of the founding principals, provides trainingservices throughout the region. Established in 1993,FUCOMI is a joint initiative between the Principality ofAsturias’ Ministry of Labour and Social Affairs, the twoprincipal trades unions representing mining industryemployees, and HUNOSA. It operates in both theNalón-Caudal district and in Narcea, providing trainingservices to areas affected by the decline in both state- andprivate-sector coal-mining (Trinidad, 2000).

Meanwhile, in early 1999 HUNOSA created its ownemployment development subsidiary, Sociedad Asturiana deDiversificación Minera S.A. (SADIM), which has a two-foldpurpose: to provide venture capital for alternative businessstart-ups and to market HUNOSA’s own expertise in high-techservices such as cartography and derelict land restoration.


As an industrially deprived area, Asturias benefits fromObjective 1 status for European Regional Developmentfunding. Spain has also been one of the four principalrecipients of funding under the RECHAR programme,although the assistance received has been distributed widelythroughout various former mining areas in the country.Unlike in some other regions, the RECHAR programme hasnot been regarded as being of great significance to Asturias,with the criticism levelled that some of the money availablewas directed towards communities that did not, in point offact, have a mining industry tradition (Garcia, 2000). As aresult of its status, Asturias is a target area for all of the EU’sspecial employment promotion programmes (see Chapter 2),and receives EU assistance under the ECSC programme.Allocation of EU funding is the responsibility of the regionaladministration in the first instance (Gavito, 2000).


The primary tool used by HUNOSA and the nationalgovernment (representing the state interest in the company)to offset the direct economic effects of the continued loss ofcoal-mining jobs has been early retirement. Historically, over90% of the people who have left the industry since 1967 haveeither retired at normal retirement age or have taken earlyretirement. The terms and conditions for eligibility wereloosened progressively during the 1990s in an attempt toattract greater numbers of miners to take early retirement,with the minimum equivalent qualifying age being reducedfrom 57 in 1992 to 52 by 2000. In point of fact, the actualage at which a miner could retire in practice could besignificantly lower than these nominal thresholds; dependingon the number of years’ service underground and on theoccupation, it is theoretically possible for a miner aged 42who had joined HUNOSA at the age of 18 and who hadworked as a face-worker to take full early retirement benefits.

Early retirement is not compulsory, although in practice there


Spain

has been almost total acceptance by HUNOSA’s workforce.Staff members are also covered by the scheme, with earlyretirement the norm unless the individual is specificallyretained by the company beyond the threshold age.HUNOSA also has an incentive scheme for people who arenot directly involved in production, with a lump-sumpayment of up to four years’ salary (to a maximum of Pta30million – US$150,000), although there has not been any take-up for several years.

As of late 2000, early retirement benefits agreed under theexisting Coal Plan provided an ex-miner with a monthlyincome of 100% of the previous net salary, up to a ceiling ofPta417,000/month (US$2100/month). The pension isindex-linked, having started at a ceiling of Pta400,000/monthin 1998. Payments, which are funded by central government,are in line with ECSC requirements for maximum levels ofpre-retirement benefits. For illustration, in 1999 formerminers in Asturias received an average pension of Pta146,450(US$730), against which the average retirement pension inthe province, payable from age 65, was Pta91,750/month(US$460).


Aside from the requirement under current nationalagreements for the hard coal industry to continue recruitingin part proportion to job losses, the key element in helping tooffset the social and economic impact on the traditionalcoal-mining districts has been efforts to attract alternativeemployment to the Nalón and Caudal valleys. While therehas not been anything like the provision of the 20,000 directjobs that have gone from the coal industry, significant gainshave been made, predominantly within small- andmedium-sized companies that have been started within thearea.

As the lead organisation, HUNOSA has carried out a numberof initiatives – both on its own and in conjunction with otherorganisations – aimed at creating new jobs and providing thetraining needed by the companies involved. With such a highproportion of its former employees taking early retirement,and hence legally disqualifying themselves from furtherparticipation in the jobs market, the emphasis has been on theprovision of training to the next generation: younger peoplewho would previously have sought work in coal mining.

FUCOMI (Fundación Comarcas Mineras) specifically targetstraining for young people (aged 16–25) within thecoal-mining areas, with the emphasis on providing the typesof training required by existing and new employers; theorganisation thus focuses on custom-designing its trainingcourses. Topics covered are mainly vocational, with the stresson areas such as construction and metal-working, office skillsand agriculture/forestry. The organisation also operates as afreely accessible employment exchange.

A key component of FUCOMI’s structure is theestablishment of Escuelas Tallers (Training Workshops) andCasas de Oficios (Occupational Training Centres) in whichtrainees receive their instruction in real-life situations.

HUNOSA has provided a number of its former buildings forrenovation, after which they are available either for furthertraining purposes or for other industrial or commercial uses.Thus, for example, FUCOMI’s administrative offices arehoused in a former mining company office, while HUNOSA’slibrary and archives now live in the buildings associated withits former Fondon mine; FUCOMI also has a training centrehere.

Escuela Taller projects are usually of one-to-two yearsduration, with new projects being started every six months;typically, between four and six such schemes are in progressat any one time. Costs are typically in excess of Pta100million (US$500,000) per project, with trainees receiving abasic income of Pta50,000 (US$250) per month – 75% of thenational guaranteed minimum wage. Details of the numbersof courses offered each year since 1994, the number ofparticipants and the hours involved in training are shown inTable 10.

Funding for FUCOMI’s activities comes directly from thenational government and the Asturias provincial government,as well as indirectly from the European Union. Contributionsto its costs (targeted at specific projects) from INEM (InstitutoNacional de Empleo, the state labour market administrationorganisation) totalled Pta115.9 million in 1995, Pta625.4million in 1996, Pta483.8 million in 1997 and Pta141.3million (US$700,000) in 1998. Meanwhile the Principality ofAsturias contributed Pta245 million in 1994, Pta279.8 million(1995), Pta426 million (1996), Pta483.2 million (1997) andPta320.3 million (US$1.6 million) in 1998 as its part of thefunding package (FUCOMI, 1998; 1999).

Between 1998 and 2000, FUCOMI was involved in theProjecto Valles (Valleys Project) which, as part of theEuropean Union ADAPT programme, aimed at getting abetter understanding of the requirements of small- andmedium-sided enterprises, especially in the forestry,agricultural and metallurgical sectors. The project wasundertaken in collaboration with organisations in France,Germany, Greece and Italy, and involved data collection onthe companies’ training needs, the organisation of seminarsand preparation of information materials targeted at helpingsmall- and medium-sized business improve their managementand technical skills (FUCOMI, 2000b).

In terms of success rates, FUCOMI reports that around 75%of its ‘graduates’ find work within one year of completing acourse, although the organisation does not carry out anylonger-term monitoring on their subsequent careers (Trinidad,2000).


Spain


The other principal facet in addressing employment needs inthe Nalón-Caudal district is the task of attracting newemployers. Working in parallel with other provincialdevelopment agencies, SODECO (Sociedad para leDesarollo de las Comarcas Mineras) has three main areas ofoperation: the provision of financial services; operatingbusiness centres; and service activities. Its activities hadattracted a total investment of Pta20,370 million(US$102 million) to the end of 1999, resulting in the creationof nearly 1800 new jobs. SODECO’s target is for an annualinvestment of around Pta500 million (US$2.5 million) for thenext four-to-five years, with the aim of creating a further150 jobs per year (Mier, 2000).

SODECO’s financial services encompass the provision ofventure capital, participating capital loans and projectfinance. Limits on venture capital include a maximumholding of 45% of a new company’s equity for ten years; inpractice, typical values are 30% over a period of five-to-sevenyears, after which the holding is relinquished and theproceeds recycled into new projects. The company alsooperates two business centres, one in each of the Nalón andCaudal valleys. Designed specifically to allow smallcompanies to establish within a supportive environment,these centres offer subsidised accommodation as well asaccess to business advice, training facilities and specialisedcourses. The Caudal centre, for example, hosts 23 smallcompanies ranging in activity from metalworking to a localtelevision studio. Since 1989, SODECO has investedPta4,700 million (US$23.5 million) in its financial services,and has recycled some US$10 million of this; investment inits business centres has totalled Pta800 million(US$4 million) over eight years. Around 40% of SODECO’sfunding has come from the European Union’s RECHARprogramme.

HUNOSA subsidiary SADIM (Sociedad Asturiana deDiversificación Minera) is also involved in assisting theestablishment of new employment. Approved projects underits control had a potential investment commitment ofPta4,000 million (US$20 million) by the end of 2000, leadingto the creation of 290 new jobs. These cover industrial areassuch as metallurgy, construction, medical and the assembly ofspecialised automobile components. The aim is to makeSADIM financially self-supporting as quickly as possible,with venture capital being recycled (V Gonzales, 2000).HUNOSA’s diversification plans have also included theconstruction and operation of the 50 MW La Pereda powerstation near Mieres. Opened in 1994, this burns high-ash coalwashery waste and employs 70 people, of whom 40 areformer mine workers.

7.9 Other initiatives

In parallel with the initiatives being undertaken directly byHUNOSA and the organisations with which it is associated, amajor European Union programme is running between 2000and 2001. An experimental project, the RegionalEmployment Agreement for the Asturian Mining Districts

Table 10 Details of training supplied by FUCOMI,1994-1999 (FUCOMI, 2000a)

Year 1994 1995 1996 1997 1998 1999

Courses 64 86 69 77 56 55Participants 1,066 1,195 928 1,032 717 600Hours 16,288 21,690 16,970 17,007 12,400 11,360

(El Pacto Territorial Para el Empleo en las ComarcasMineras de Asturias) has a budget of Pta4,600 million(US$23 million) and is one of a number of similar initiativesaimed at alleviating the effects of economic readjustment invarious areas of Spain. In relation to coal mining districtsparticularly, a comparable programme is in implementation inthe provinces of León and Palencia, where production is inthe private sector.

Participants in the agreement include the Asturiangovernment, trades unions, the Asturian Federation ofMunicipalities (Federación Asturiana de Concejos – FAC),the Asturian Business Federation (Federación Asturiana deEmpresarios – FADE), the University of Oviedo and the EU.The programme includes more than a dozen topics, includinga study on the problems facing women and otherdisadvantaged groups in finding employment in the miningdistricts of Asturias, the rehabilitation of environmentallydegraded mining areas and communities, the promotion ofalternative business initiatives in rural areas, and investmentin innovative business opportunities. For example, the projectaimed at environmental improvement involves an investmentof Pta1,400 million (US$7 million) in the areas covered bythe 27 municipalities involved in the agreement, and isintended to provide nearly 350 new jobs. Funding is beingobtained from the European Social and RegionalDevelopment Funds, with contributions also being made insome cases (Oviedo and Gijón, for instance) by the citycouncils involved (University of Oviedo, 2000).

The comparable programme for the mining districts of Leónand Palencia involves a budget of Pta1,028 million (US$5.1million). Again, the aim is to promote the diversification ofregional economies that have traditionally depended on coalmining, with a four-way emphasis on improving the businessinfrastructure in order to encourage rapid new investment, inthe development of alternative uses for the region’s naturalresources, in improving business competitiveness andinnovation, and in developing new job opportunities,especially for the young and long-term unemployed.


The Asturian coalfields have suffered considerableemployment loss – not only in mining but also in othertraditional heavy industries – and the region is still goingthrough the process of adapting to its new economicenvironment. This process has been hindered by a number ofcontributory factors, including conflicting politicalaspirations between the provincial and national governments,national energy strategies that have been repeatedly alteredand, most importantly, the region’s geographical isolation. Onan historical basis, this has meant that Asturias has receivedinadequate infrastructural development that is only now beingaddressed by massive investment under the 1998-2005 CoalPlan. In addition, HUNOSA’s continued existence is by nomeans assured, given the company’s high level of dependenceon state subsidies that run contrary to EU competition policy.

Having lost some 15,000 direct mining jobs between 1987


Spain

and 2000, on the face of it the fact that fewer than 2000replacement jobs have since been created suggests asignificant shortfall in the provision of alternativeemployment opportunities. Nonetheless, this is a considerableachievement given that much of the training and businesssupport effort has been directed at small- and medium-sidedcompanies that are perceived as being more likely to have anaffinity with the region rather than multinationals who maybe able to provide large investment but will actually createrelatively few jobs for the money. In addition, largercompanies are usually more dependent on transportinfrastructure for their raw materials and finished products. Inthis respect the coastal regions of Asturias offer bettercommunications links than do the mining districts inland: acomparison between the situation here and the relationship inthe UK between the mining valleys of South Wales and theso-called ‘M4 Corridor’ nearer the coast – which hasattracted much more inward investment – appears particularlyapt (see Chapter 8.8).

The mining districts of Asturias have a long history of heavyindustrialisation, with reliance for large-scale employmentsince the 1950s on subsidised, state-run companies. Thetransition to a more flexible workforce with the differentskills needed for the new generation of small- andmedium-sized companies that is growing up in theNalón-Caudal district has required the development ofdifferent mind-set among both employers and employeesalike, a process that takes time. The improvements that haveoccurred in terms of communications and the environmentduring the 1990s have helped in this respect (Mier, 2000).Other positive moves include the construction of a newhighway link through the Nalón and Caudal valleys, and ofnew premises in Mieres for part of the University of Oviedo.

The liaison between SODECO – creating alternativeemployment – and FUCOMI – providing the trainingrequired to satisfy the new employers’ specific needs – iscritical to long-term success. SODECO also has regularcontact with the Asturian government’s regional developmentagency, which assists in providing additional exposure topotential investors through its own marketing activities. Thecost of job creation by this type of system is, of course, highbut is considered worth paying to ensure the long-termsurvivability of newly created employment opportunities.

Significant conclusions that can be drawn from past andcurrent experience in the Nalón-Caudal district of Asturiasinclude:● there does not appear to be any significant conflict

between those organisations providing training and jobcreation services to the mining districts and theircounterparts covering the province as a whole. Theprovincial training, employment service and developmentagencies provide support for those involved in addressingdirectly the employment needs of the former miningcommunities;

● the close coordination of job creation and training givesa better chance for long-term success, even where small-and medium-sized businesses are taking over fromformer state monopolies in terms of employmentprovision;

● Asturias’ position as being some ten years behind othersimilarly economically handicapped regions in WesternEurope in having to cope with mass coalfieldunemployment has had the benefit that the people mostclosely involved in training and in attracting new jobshere have had the opportunity to see what has beenattempted elsewhere, and to use this experience as afoundation for the schemes put in place in thePrincipality;

● much of the job creation has been in small- andmedium-sized companies; the only major investor in theCaudal valley has been the German company, Thyssen,which has created around 500 jobs in five separateplants. Larger employers, such as DuPont, haveestablished plants in the coastal region, although the‘trickle-down’ effect into the wider industrial communityhas been slow to materialise (Burns, 1999).

● While addressing coal production and coal-industryemployment in the medium term, the 1998-2005 CoalPlan still includes requirements for continuedrecruitment into the coal industry. The level ofcompliance varies between the private and state-runsectors. This will inevitably lead to greater (and perhapsdifferent) demands in the longer term in relation to thenumbers of younger ex-miners for whom provision willhave to be made;

● by far the majority (over 90%) of eligible ex-minersfrom HUNOSA have opted for some form of retirementover the past 15 years. The number re-entering theformal labour market has been minimal, and in any caserecipients of pre-retirement benefits are precluded by lawfrom seeking further employment;

● by pursuing almost exclusively the early retirement routefor ex-miners, mainly for reasons of ensuring socialharmony, the Spanish government has committed to ahuge long-term liability in terms of the provision ofpensions and benefits which, in some cases, may last forover 20 years before normal retirement conditions apply;and

● boredom represents a major problem for those who takeearly retirement, with few traditional alternative pastimesavailable. Although hereditary farm lands have oftenbeen retained in rural communities, farming skills havebeen lost. The presence within the community of a largenumber of relatively well-paid retirees has created somesocial strains, especially between generations. Academicstudies have suggested increased prevalence of bothalcohol-related problems and marriage break-up withinthe group, while the role model given (relatively young,non-employed but affluent) can create the wrongimpression amongst the younger generation.


Spain

88 United Kingdom


Industrial-scale coal mining in the United Kingdom datesfrom the 16th Century or before; already by 1600, thenortheast English coalfields of Northumberland and Durhamwere exporting over 250,000 t/y of coal, mainly to southernEngland (Clavering, 1994). By 1913, the British coal industryhad reached its peak with some 1,100,000 mine workersproducing a record 287 Mt, one-third of which was exportedto markets worldwide. At that time, over 1430 companiesoperated some 2600 mines (Thornes, 1994).

Coal production developed throughout the United Kingdom,with the exception of Northern Ireland, ranginggeographically from Somerset and Kent in southern Englandto the northeast Scottish Highlands. Major coalfields, uponwhich much subsequent industry was founded, includedSouth Wales, the English West Midlands, Lancashire, theEast Pennines, northeast England and central Scotland, withother productive outliers in Somerset and Kent, North Walesand northwest England (see Figure 18).

The industry was nationalised in 1947, at which time some718,400 workers were employed in 958 mines. Although coalremained the country’s primary source of fuel for much ofthe next decade, falling demand in the period from the late1950s to the 1970s meant that the National Coal Board(NCB), the state coal-mining company, closed an average of34 mines annually between 1958 and 1973. In 1975, 241mines remained. By 1985 this had fallen further to 133, andby 1992 only 50 mines were in operation, employing 43,800people (Thornes, 1994). Privatisation of the renamed BritishCoal Corporation at the beginning of 1995 broughtgeographical fragmentation to the industry, and followed afurther drastic reduction in both capacity and employment,such that just 31 deep mines were transferred from statecontrol to the private sector, with a direct labour force ofaround 9000. These figures do not, however, include workersemployed in underground by contractors or in opencast coalproduction, an activity that accelerated rapidly during theperiod between 1970 and 1990, but which was almostexclusively operated by civil engineering companies whoemployed their own labour. Figure 19 shows the progressivereduction in the number of mines between 1984 and 1999,Figure 20 illustrates the resulting fall in employment overthis period, while Figure 21 shows British coal-productiontrends since 1960.

Although huge numbers of people left the British coalindustry in the period between 1950 and 1980, little provisionfor socio-economic support was made, or indeed wasnecessary at that time, since the NCB had a well-establishedpolicy of internal transfers to fill employment vacancies. Themajor change came in the aftermath of the 1984-1985miners’ strike, following which there was a concertedcampaign to close the industry’s less economic capacity. Thisresulted in redundancies on an unprecedented levelthroughout the late 1980s, and again in the early 1990s whenthe final round of mine closures took place. This chapterfocuses on the effects that these closure programmes had onthe main British coalfields between 1980 and 2000, andreviews the various regeneration schemes put in place.

A considerable amount of academic research has been carriedout on the social and economic effects of mine closures in theUK during the this period; more so probably than in anyother Western European country. In some cases, these studieshave focused specifically on the impact on individualcommunities; others have investigated wider, regionalaspects. Several highlight the perceived shortcomings ofearlier assistance programmes, although it is important toplace these within the context of the highly politicallycharged atmosphere under which the entire mine closure tookplace in the UK during the 1980s and 1990s.


In retrospect, the restructuring of the British coal industry can

Kent

Midlands

South Wales

NorthWales

EastPennine

Northeast England

Cumbria

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Lancashire

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Figure 18 Coalfield areas in the United Kingdom


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be seen as having taken place in two distinct phases. Thefirst, which ran from soon after nationalisation in 1947 untilthe late 1970s and reflected predominantly the fallingdomestic market for coal in the face of increasingcompetition from other energy sources, resulted in a steadyreduction in both the number of deep mines in operation andin the number of mine workers. At this time, labour turnoverwithin the coal industry allowed many of those directlyaffected by the closure or amalgamation of the mine at whichthey had been working to move to another NCB mine. Forthose who were unable or unwilling to move, however, thesituation was less promising for, as Waddington and Parry(1995) noted in relation to the late 1960s, ‘Insofar asgovernment policy towards pit closures was concerned, therewas no overall planning of new industries or of training or ofeducation for leisure; there was no more than marginalprovision for economic security’.

The second phase (1980-1995) was driven mainly by thegovernment of the day’s privatisation policies. Whereasprevious mine closures had often been triggered by reserveexhaustion or by insurmountable geological problems, thelater restructuring resulted directly from the government’srequirement for the NCB to achieve financial independence,without the need for state subsidies.

There was, in addition, a level of political will that has rarelybeen evident in other aspects of national economic life, eitherin the UK or elsewhere in the countries of Western Europe.As Parker (1994) states “The Conservative government’spolicy objectives for the coal industry ... had a strongpolitical element: to break the power of the National Unionof Mineworkers (NUM) and to expose the industry to marketforces as a prelude to its ‘ultimate privatization’”, a statementthat perhaps needs to be clarified here so as to convey thestrength of the political agenda involved.

In the early 1970s, the NUM twice outmanoeuvred the

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01992 1993 1994 1997

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Figure 19 Number of deep coal mines in the United Kingdom, 1984-1999 (CCC, 1997)

0

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00)

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Figure 20 Mine workers and associated industrialemployment in the UK, 1984-1999

0

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Figure 21 Coal production in the UK, 1960-1999(IEA, 2000)

Conservative (centre-right) government of the day throughstrike action, resulting in the government’s general electiondefeat in 1974. When the Conservatives regained power in1979, privatisation of virtually all of the industries then instate ownership – the electricity, gas and water utilities,steelmaking, telecommunications and coal productionamongst them – was high on the government’s list of politicalpriorities. There was also a strong political desire for revengeagainst the NUM, a position that was exacerbated by theextreme mutual personal antipathy that existed between therespective leaders of the union and the government.

The major coal industry strike that ran from 1984 into 1985proved to be the nadir of industrial relations in the industry.Called by the NUM over proposed capacity closures thatwould have cost 20,000 jobs in 20 mines, it resulted in theunion becoming split on a regional basis and, eventually, inthe government achieving its political aims in relation to boththe union in particular and British coal mining in general.The cost of the 11-month dispute was estimated to have beensome £1750 million to the NCB, plus a further £1500 millionto the government and to major customers for British coal,such as the steel industry (Shrimpton, 1985).

Despite its accelerated programme of closing uneconomiccapacity, in the mid-1980s the NCB – which was renamedthe British Coal Corporation (BCC) in 1987 – was still ableto invest substantially in those operations for which itbelieved a future was assured, although much of thisinvestment was made in technology rather than humanresources. Given the political task of transforming itself tooperational profitability, BCC’s principal thrust was towardsthe consolidation of capacity into fewer, more productiveunits, most of which were located in the East Penninecoalfield. The last deep mine in the Kent coalfield closed in1989, at which time one deep mine remained in Scotland andsix in South Wales. Between 1984 and 1992, 120 mines wereclosed with the loss of 123,350 jobs.

In late 1992, the government announced that it intended toclose 27 mines out of the remaining 50, and place a furtherfour on care-and-maintenance; following a review, this targetwas initially amended to the closure of 13, with six to be‘mothballed’ and 12 to continue under ‘market-testing’conditions. (In the event, by the end of 1994, 27 out of the31 had been shut). However, the government’s 1993 reviewdid produce one major advance in terms of offsetting theimmediate social and economic consequences of the renewedclosure programme, in that it made provision for £75 million(US$120 million) to be made available for training,counselling and helping former miners search for new work,with a further £75 million for the provision of sites andpremises (Waddington and Parry, 1995).

The coal industry that was returned to private-sectorownership at the beginning of 1995 consisted of 31 deepmines, some of which remained ‘mothballed’, employingfewer than 9000 people. Further job losses occurred asseveral of the new producers failed economically, and moremines closed in the face of still lower demand forBritish-produced coal from the electricity supply industry. Byearly 2000, 17 deep mines remained open, providing


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employment for 9400 people underground, includingcontractors. Geographically, this was split 8,100 in England,700 in Scotland and 600 in south Wales (Coal Authority,2000).

The return of a centre-left government in the 1997 generalelection brought new initiatives targeted at the areas ofEngland, Wales and Scotland that had been worst affected bythe mine closure programmes since the mid-1980s. Thegovernment established a ‘task force’ to report on social andeconomic conditions in the coalfield areas, in response towhich it published a framework for a long-term programmeaimed at the economic regeneration of these areas. Moredetails of this programme are given in Section 8.9 (below).

8.2 Social impact

In 1980, the nationalised British coal industry employednearly 290,000 people, of whom 231,000 were industrialworkers in deep mining. By the end of 1994, all but 13,000of these people had lost their jobs, with a core of just 7000miners employed underground in the state sector. Thesefigures do not include private-sector mines or contractorsemployed on opencast sites. A generic portrait of the‘average’ ex-miner in 1994 showed a man 38 years old,having spent some 19 years in the industry, 11 of which hadbeen at the last mine at which he had worked beforeredundancy. With older miners having already left theindustry through early retirement and other schemes, theindustry in the early 1990s was typified by ‘a relativelyyoung workforce with long experience in mining, but littleexperience of work in other industries (CCC, 1994).

The mine closure policies that were implemented betweenthe mid-1980s and the mid-1990s virtually ended deepmining in every coalfield in the United Kingdom with theexception of the East Pennines. Further mine closures in thepost-privatisation period (since 1995) have caused further joblosses. Only one deep mine remains in operation in Scotland,one in Wales, one in the English Midlands and one, undercontinuing threat of closure, in northeast England. All otherproduction capacity is concentrated in those parts ofYorkshire and Nottinghamshire that lie to the east of theformer main East Pennine coal-mining district.

A feature of the growth of British coal-mining communitiesin the late 19th and early 20th Centuries was the concept ofthe ‘pit village’ – population centres, some of which wererelatively small but with others (such as Ashington innortheast England) of considerable size – that wereestablished with the sole aim of providing housing and socialamenities for the workers at individual mines. An estimated1.4 million people still live in pit villages, and while theseoften became incorporated into larger conurbations,especially where clusters of mines were sunk, in other casesthey remained rural, essentially isolated and continuing toserve their sole source of employment right up to finalclosure. The social and economic consequences forcommunities such as these were obviously much more severethan where alternative or complementary industry hadbecome established. Another important consideration here is

that the NCB/BCC often actively discouraged theestablishment of other industries that might prove competitivein terms of employment, seeking to maintain its own pool oflabour.

As Critcher and others (1995) noted in their comparativestudy of ex-miners and their families in pit village andnon-pit village communities in the East Pennine coalfield,there can be recognisable differences in the effects of mineclosure on different community types. These authors foundthat former miners from the pit village environment appearedto be at a significant disadvantage to their counterparts froma larger urban population in terms of age, skills, training andeventual job prospects.

Notwithstanding the social impact on communities for whichthe mining industry had provided the principal, if not theonly focus, the economic repercussions of coal industryrestructuring on some areas of the United Kingdom has beendevastating. For example, in its report for government, theCoalfields Task Force (1998) noted that ‘South Yorkshire, atthe heart of England’s coalfields, has a Gross DomesticProduct of less than 75% of the European average – thelowest of any UK region on EU statistics – and falling’.Comments of a comparable nature could equally beaddressed at coalfield communities in south Wales, northeastEngland and in Scotland, where coal industry closure hascompounded the downturn in regional economies caused bythe decline in other traditional industries such assteel-making or textiles.

The overall impact of mine closures was to increase theunemployment rate in each of the areas involved, some ofwhich already had higher unemployment than the average forthe UK for historical reasons as well as reflecting otherindustrial recession. However, as the Coalfield CommunitiesCampaign notes, ‘according to official figures, by 1997unemployment in the coalfields was lower than in 1984,despite the loss of more than 200,000 mining jobs in theintervening period’ (CCC, 1997). The general consensus isthat official unemployment statistics no longer give a truereflection of the actual level of joblessness in a community,with mechanisms such as long-term sickness benefit, earlyretirement and participation in government training schemesbeing used to transfer a proportion of the total number ofunemployed people off the official register. In particular,incapacity benefit – state social security support for peoplewho are unable to work as a result of illness or injury(perhaps sustained at work) – is now recognised as being amajor means of reducing the unemployment count.According to Beatty and Fothergill (1996), many formermining industry employees have been able to transfer fromunemployment to incapacity benefit, and consequently theseauthors argue that official unemployment statistics (12.4% inthe coalfields and 14.0% in pit villages in April 1991)underestimated the true picture by a considerable margin.They contend that the actual figures at that time were 22.5%and 26.7% respectively, and that the situation actuallydeteriorated further during the mid-1990s as the final roundof mine closures took place.

Not all coalfields suffered to the extent experienced by the


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old industrial heartlands, however. The Kent coalfield, one ofthe last to be developed and reliant on miners from otherparts of the country, was also the only area affected in themore affluent southeast of England. Consequently, while ex-miners in the northern coalfields and in south Wales haddifficulty in obtaining permanent jobs, former Kent minershad greater opportunities to find new work.


The UK government’s approach to economic regeneration ofthe areas affected by coal industry restructuring has largelybeen implemented on a regional, rather than on anindustry-specific basis. That being said, it is only since thelate 1990s that regional policy has featured in thegovernment’s programmes; under previous administrations,central government predominantly took responsibility for allmatters that were above the level of purely localadministration. The exceptions to this generalisation wereWales and Scotland, for which the UK central governmentincluded specific departments (the Welsh and ScottishOffices), and which have subsequently received greaterregional autonomy under devolution provisions. Thus,responsibility for attracting new investment into the oldcoalfields during the 1980s and 1990s often rested withexisting organisations whose remit was much wider than justthe coal industry. Some local authorities, of which thosecovering the Dearne Valley in South Yorkshire are anexample, took their own measures in response to the loss ofcoal industry jobs (Salt, 1995).

The main thrust of British Coal’s efforts to prepare its formeremployees for alternative jobs was carried out through awholly owned subsidiary, British Coal Enterprise (BCE). Inaddition to providing low-interest loans to new or expandingsmall businesses in the coalfield areas, BCE also supportedother financing initiatives as well as providing managedworkshop and industrial facilities in which new companiescould become established. BCE also took responsibility forthe implementation of British Coal’s Job and Career ChangeScheme (JACCS), which provided counselling and training toex-miners. More details of BCE’s activities are included inSection 8.7. Other training and job placement activitieswithin the coalfield areas were undertaken by the normalstate agencies.

With privatisation of the coal industry at the beginning of1995, organisations such as BCE were either sold separatelyto the private sector, or ceased operation. Responsibility forformer mine sites in England that have redevelopmentpotential was transferred to another state agency, EnglishPartnerships, which took over 56 properties of varying sizewith the aim of rehabilitating them and returning them to themost appropriate use – industrial, agricultural, amenity orhousing (English Partnerships, nd).

Following the publication in 1998 of the government’sresponse to the Coalfield Task Force report, newly createdRegional Development Agencies (RDAs) were given the taskof coordinating inward investment, raising people’s skills,improving business competitiveness and general regeneration

within their areas of responsibility (DETR, 1998). However,the geographical area covered by each RDA is typicallymuch greater than the coalfield districts it contains, meaningthat these still have to compete for inward investment withother needy districts that also lie within the RDAs’jurisdictions.

In addition, the government established the CoalfieldsRegeneration Trust, with responsibility for supportingcommunity-based initiatives such as one-stop shops andcredit unions. While initially proposed for the Englishcoalfields alone, its remit was later extended to coverScotland and Wales (CCC, 1999). A further lending agency,the Coalfields Enterprise Fund, was also proposed with theaim of helping fund small businesses with high growthpotential located in the coalfield areas. However, itsimplementation was delayed by the EU’s CompetitionCommission on the grounds that it constituted ‘state aid’, andby early 2001 the matter had yet to be resolved.


British access to EU funding, including ECSC payments,only began once the country joined the European Communityin 1975. During the mid-1990s, former coalfields in the UKwere widely covered by Objective 2 areas, bringing access toEU Regional Structural Funds. In the late 1990s two coalfieldareas, South Yorkshire and the south Wales valleys, wereupgraded to Objective 1 status, bringing to three the numberhaving access to the highest level of EU funding. However,changing priorities within the EU also brought a reduction inthe total Objective 2 coverage in the UK, with some coalfieldareas losing this benefit.

The UK was also one of the major recipients of EU fundingunder the RECHAR programme, with payments totallingsome £300 million (US$470 million) during the first(1990-1993) and second (1994-1999) phases of theprogramme. However, central government-imposed ceilingson local administration spending during the early 1990sinitially meant that in a number of cases the full potentialbenefits from RECHAR grants and loans were not availableto individual districts (CCC, nda). Government rules on‘additionality’ were later changed to allow all grants fromEuropean regional development funds to be used for extraprojects, not merely to cover or replace existing budgets.

Funding from the ECSC to British Coal to cover retrainingunder Article 56 of the treaty totalled £53 million (US$85million) between 1985 and 1994, while ECSC grants made tothe UK government during 1987-1991 totalled ECU212million (US$235 million), including receipts for retrainingfrom RECHAR (IMCL, 1998).


From the 1950s until the early 1980s, job losses associatedwith most mine closures were handled through a combinationof voluntary redundancy, early retirement and internal


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transfers within the NCB. Typically some 60–70% of workerstook redundancy, with the remainder preferring to transfer.While miners were usually offered alternative employment atmines within the same coalfield area, in some cases limitedlocal transfer opportunities meant that miners whose pit hadclosed had to move to other parts of the UK. The NCB/BCCmade financial provisions for such people, covering the costsof moving house together with compensatory payments forthe inconvenience caused, subject to a two-year minimumemployment term at the new pit.

BCC’s voluntary early retirement scheme that operated up to1990 offered miners aged 60 or over with at least two years’service the opportunity to receive a lump-sum payment andcontinuing higher weekly unemployment benefit to thenormal state retirement age of 65. The threshold wassubsequently reduced to age 50. BCC abandoned the schemebecause its equivalent redundancy package terms were morefavourable. The total cost of early retirement paymentsbetween 1967 and 1987 was £2600 million, with on-goingcosts of some £60 million annually to support the scheme.The total cost of all early retirement and redundancypayments between 1985 and 1995 reached almost £6600million, of which around £160 million came from the ECSC(Edwards, 1992; IMCL, 1998).

During the final round of mine closures, transferopportunities were virtually non-existent, and the potentialfor attracting miners into early retirement had also beenexhausted. BCC then introduced a series of increasinglyattractive lump-sum payment schemes aimed at inducingprogressively younger miners to leave the industryvoluntarily. In some cases, additional bonuses were offered inreturn for miners accepting the immediate closure of theirmine without resort to the consultation processes that hadpreviously preceded the ending of production. Based on theindividual miner’s age and length of service, lump-sumsranged widely up to a maximum of nearly £40,000 for older,experienced men in the late 1980s, with a continued right tonormal state unemployment benefit for one year togetherwith concessionary coal supplies.

Between 1952 and 1994, all NCB/BCC miners were coveredby a special contributory pension scheme, the terms andconditions of which (such as the level of benefits andpensionable threshold age) were amended on severaloccasions. Since 1994, the scheme has been guaranteed bythe government, while a new pension scheme was establishedfor miners in the privatised industry after 1995. All ex-minersare entitled to an industrial pension from the age of 60, whilethose who left the industry after 1992 can opt to receive areduced level of pension from age 50 (Beatty and Fothergill,1999). Actual pension payments vary extensively fromindividual to individual, although the basic formula providesfor an annual pension calculated as being one-sixtieth of theminer’s final salary per year of service, up to 40 years’ in all;this equates to a maximum of two-thirds of the final salary,and is index-linked. In the late 1990s, the financialperformance of the mineworkers’ pension fund enabled itstrustees to allocate a number of one-off bonuses to itsmembers, so enhancing benefits (Mineworkers’ PensionScheme, 1997).

While mine workers who elected to take early retirement hadat least some level of continuing financial security, those thatchose to seek alternative work often experienced majordifficulties. Given the generally low level of economicactivity in the coalfield areas and ex-miners’ lack ofexperience in other industries, this is hardly surprising. Theeffects of the economic recession that hit the UK during theearly 1990s only exacerbated an already difficult labourmarket situation. CCC (1997) estimated real (as opposed toofficially recorded) unemployment in 15 former coalfieldareas in the UK to range from a minimum of 20% to over35% in areas of south Wales and northeast England,compared with a UK average of around 16%.

Surveys carried out since the early 1990s have reportedex-miners’ typical experience of job opportunities offering onlytemporary or part-time work, at wage rates markedly lowerthan those they had earned whilst in mining (Edwards, 1992;CCC, 1997). A considerable number found work in miningcontracting, essentially providing services to their formeremployer at the same time as reductions continued unabated tothe permanent workforce (Waddington and Parry, 1995).

8.6 British Coal’s training schemes

A significant feature of many of those who lost their jobsduring the restructuring of the UK coal industry was theirpoor overall educational standard. While Edwards (1992)notes that ‘about one-third of the UK workforce lacks themost basic educational or vocational qualifications’, thesituation in the coalfield areas is even more depressing.

BCC’s principal training and counselling service, the Job andCareer Change Scheme (JACCS), provided ex-miners with ameans of identifying potential alternative employmentopportunities in addition to those available from the normalstate employment service. Run for BCC after 1987 by BCE,JACCS offered a structured approach to alternativejob-seeking, involving:● establishment of a ‘job-shop’ at the mine to be closed;● an interview with a trained counsellor for each employee

who wished to use the service;● identification of the employee’s particular skills;● search within the local area for employers seeking such

skills; and● matching available skills to existing job vacancies.

The emphasis of the JACCS programme was on matchingvacancies with an ex-miner’s existing skills, and retrainingwas only offered if this would improve the chances of findinga new job or where an employer offered ‘on-the-job’ training.Where retraining was deemed necessary, provision wouldnormally be sought from local training companies or othergovernment agencies.

By no means all BCC’s ex-miners took advantage of JACCS,since many took early retirement while others distrusted anorganisation set up by their former employer. During theperiod from the mid-1980s to the early 1990s, about 50% ofredundant miners used the service which, BCE claimed,achieved an 87% success rate in placing people into new jobs


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(Pickering, 1995). The average cost per placing, includingretraining where necessary, was £1,800 (US$2,800).

8.7 British Coal Enterprise

British Coal Enterprise (BCE) was established in 1985 withthe aim of helping – through working with other agencies –to create jobs and stimulate economic regeneration in thecoalfield areas. Its outplacement and associated trainingservices were available free of charge to ex-BCC employees,and were also offered on a commercial basis to othercompanies, both within and outside the coalfields (Pickering,1995).

BCE was organised on a regional basis, corresponding toBCC’s seven operational areas, each covering a majorcoalfield. Its activities centred on:● business funding;● support for enterprise agencies;● managed workspace and small business development;● outplacement services; and● marketing its expertise both in the UK and in Europe on

a consultancy basis.

The company was established as a wholly owned subsidiaryof BCC with an initial capital, funded by the government, of£5 million, a figure that had been increased to £60 million(US$100 million) by the early 1990s (Edwards, 1992).Following privatisation of BCC at the end of 1994, parts ofBCE were also sold to the private sector, although by 2001,only some property assets appear to have remained.

BCE’s funding activities encompassed the provision of softloans to small businesses. Loans were capped at the lesser of£5000 per job created or 25% of total funding requirements,although the actual amounts lent varied between £1000 and£1 million. Interest rates charged were typically about 2%above base rates, similar to those at which BCE could obtainfinancing from the UK government. BCE was also able totake an equity stake in a business, normally in the range£25,000 to £250,000 for a five-to-seven year maximumperiod, and often in conjunction with additional loans.Specific criteria that businesses had to satisfy in order toobtain financing from BCE included:● new jobs had to be created during the life of the loan;● new jobs must not displace other jobs in other

businesses;● the business must be located in a coalfield area; and● business viability had to be demonstrated.

BCE’s funding role proved very valuable to start-upbusinesses, since once BCE had offered assistance, it wasoften easier to attract further financial support from othercommercial sources. By early 1994, BCE had cumulativelyinvested £85 million in over 4,300 business developmentprojects involving a total funding requirement of £718million, inferring that every £1 of BCE funding attracted afurther £7.50 from other sources. The company had writtenoff around 9% of its loans as bad debts, with a further 22% ofborrowers ‘in financial difficulties’ by 1993(Pickering, 1995).

BCE’s support for local enterprise agencies – localorganisations dedicated to supplying business planning andadvice services – encompassed the provision of funding andmanagement advice. Its commitment between 1985 and 1993totalled over £6 million, with annual costs running at£0.5–0.75 million.

The provision of workspace to new businesses progressedfrom using converted BCC properties to the development ofcustom-designed units located on industrial estates. Suchdevelopments benefited from a 40% grant from the EUregeneration funds. Some offered administrative services, andall were provided under short-notice conditions whereby newbusinesses could move in, out or into larger premises ascircumstances required. By mid-1994, BCE planned to have790 units at 41 locations, involving an annual investment inthe order of £15–17 million by the mid-1990s.

BCE’s outplacement and training activities centred on itsmanagement of BCC’s JACCS programme for its formeremployees. More details of this are contained in Section 8.6.Between 1987 and 1993, BCE established over 200 JobShops at closing mines, with more then 40 in operation in1993 alone. The services provided at these Job Shops coveredcareer counselling, job search methods, the preparation ofcurricula vitae (resumés), interview techniques and advice onretraining (Fothergill and Guy, 1994).

By early 1994, BCE claimed to have ‘helped to create’ over106,000 ‘job opportunities’ at a cost per job ranging from£440 (US$700) for the provision of workspace to £1,180(US$1900) for each outplacement and £1570 (US$2500) forits loan services. At that time, its claims covered some 46,000jobs in businesses that it had supported, 13,600 fromworkspace activities and 46,300 through JACCS. However, asFothergill and Guy (1994) note, these figures do not actuallyrepresent the number of new jobs that were created in thecoalfields, and while not deprecating BCE’s efforts, theseauthors recalculated the organisation’s impact as resulting inthe creation of between 7000 and 24,000 new jobs, with acentral estimate of 16,000. On the basis of this estimate, theyalso re-appraised the cost per job as being between £4300(US$6900) for workspace provision and £16,600(US$26,550) for outplacement and retraining. These costs,the authors note, ‘compare favourably with other job creationagencies and reflect well on the efficiency and commitmentof BCE staff’.

8.8 Attracting inward investment

All of the areas in the UK affected by coal industry closureshave made significant efforts to attract new industries. Insome cases, this has not been easy on account of poorcommunications infrastructure and overall physicaldereliction resulting from decades of economic recession. Inconsequence, the achievements have been mixed. Forexample, the Fife region in east-central Scotland has beenremarkably successful in attracting alternative employers. Bycontrast, former coal mining communities located in thevalleys of South Wales have been bypassed as inwardinvestment has established mainly in the ‘M4 corridor’ to the


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south, where communications with outside markets are betterestablished. The creation of Enterprise Zones by thegovernment in many coalfield areas, offering fiscal incentivesto new businesses to set up there, has been of considerablebenefit in helping to offset further economic decline.

An example of the efforts made by one district to encourageeconomic regeneration is provided by the Dearne Valley inSouth Yorkshire (England), where closure of the steel andcoal industries brought substantial dereliction, loss of jobsand few prospects for their replacement. Established in thelate 1980s by three local authorities, the Dearne ValleyPartnership developed a strategy that involved a five-yearprogramme to restore all of the derelict land in the valley,construct new roads and industrial developments to support atleast 4000 new jobs, build 1000 houses, implement a majorskills training programme and provide support forcommunity-based initiatives, at a cost of some £170 million(US$270 million) (Owen, 1993). As well as achieving itsaims in terms of new communications infrastructure, theproject has been successful in attracting new employment inboth the industrial and service (call centres) sectors, and inaddressing environmental issues, partly through the formationof Groundwork Dearne Valley, which provides on-the-jobtraining while carrying out restoration projects (EC, 1998).

8.9 Post-privatisation initiatives

In 1997, the newly installed centre-left Labour governmentappointed a Coalfields Task Force to report on social andeconomic conditions in the UK’s coalfield areas and ‘toformulate a practical programme of action to helpcommunities affected by pit closures’ (Coalfields Task Force,1998). The committee’s findings were published in mid-1998,in response to which the government presented a ten-yearprogramme for regenerating the coalfield communities(DETR, 1998). The measures outlined in the government’splan included:● allocating over £1000 million (US$1500 million)

annually to coalfield area regeneration;● creating regional development agencies to lead economic

development and coordinate existing regional spendingprogrammes;

● investing an additional £354 million over the first threeyears; including

● investing £45 million over the first three years in aCoalfields Regeneration Trust to support communityinitiatives; and

● investing £15 million over the first three years in aCoalfields Enterprise Fund to support small businesseswith high growth potential, aiming to create a £50million-plus fund in partnership with the private sector.

Specific targets covered by this expenditure includeadditional funding for English Partnerships’ ten-yearprogramme to regenerate former mine sites, which aims tocreate 46,500 ‘job opportunities’ by facilitating theconstruction of new industrial parks, transport infrastructureand housing. The budget also includes an allocation forrenovation of existing public-sector housing stock in theformer coalfields, and funding to help improve education

provision and attainment in these areas, amongst a number ofother initiatives. In late 1999, the Coalfield CommunitiesCampaign published a review of progress that had been madeto date in implementing these commitments; the overallconclusion was that although many of the Task Force’srecommendations had been addressed, some areas stillawaited government action.


The foreword to the Coalfields Task Force report, issued inmid-1998, states that ‘It would be wrong to give theimpression that nothing has been done to relieve the impactof the pit closures. Central and local government, thevoluntary sector and the communities themselves have allmade efforts. Many pit heads and tips have vanished, whilenew factories have been built and training programmesdeveloped. Government support has included assisted areastatus for many coalfields and the two-year emergencypackage of aid following the closures announced in 1992.European funding has been invaluable, while EnglishPartnerships’ Coalfield Programme is an important stepforward and the impact of Single Regeneration Budgetpartnerships is beginning to be felt’ (Coalfields Task Force,1998).

Nonetheless, it is impossible to escape the conclusion that thecoal mine closure programme implemented between themid-1980s and the mid-1990s was carried out without acomprehensive strategy in place to ensure the maintenance ofeconomic activity in those areas and communities that wereworst affected. As the chairman of a 1993 conference onBritish and German aspects of coal industry restructuringnoted, ‘In Britain, the only extant plan seems to have beenthe long-term intention to privatise the remnants of the coalindustry’ (Critcher, 1995).

It is also impossible to ignore the intensification in social andeconomic deprivation that has occurred in some of the oldindustrial areas of the UK following the closure of the coalindustry. Until the late 1990s, efforts at regeneration appearto have lacked adequate coordination between various levelsof government, regional agencies, non-governmental bodiesand the communities most affected, with the result that it hasoften been impossible for the coalfield areas to benefit fullyfrom the regeneration being attempted. Even with thecreation of regional development authorities (RDAs), whichare tasked with coordinating regeneration programmes, theprioritising of action in the coalfields remains open toquestion: in their draft strategic planning, two of the sixRDAs that cover coalfield areas failed to mention theirspecific needs (Wainwright, 1999).

Nor should the costs involved in regeneration projects beunderestimated. Taking the earlier example of steel industryclosure in the northeast English town of Consett, the cost ofcreating around 1500 new manufacturing jobs during theperiod 1980-1988 was estimated at some £50 million,equivalent to £33,000 (US$50,000) per job. Having lost 8000jobs in the late 1970s with the closure of the steel plant there,


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by 1990 Consett still had 3500 registered unemployed plus afurther 2000 or more on various government trainingschemes. Most of these were either middle-aged men (formersteelworkers) or school-leavers who had yet to find apermanent job. According to Hudson and Sadler (1995), keyfactors that proved successful in attracting new employmentto the district included:● the availability of generous grants and loans from the

state;● the availability of financial assistance;● the role of the local industrial development agency in

assembling assistance packages; and● the ability of companies to attract venture capital as well

as public-sector grants.

These authors also note that the greatest number of newbusinesses were set up by people from outside the immediatearea, while the greatest number of subsequent businessfailures involved companies that were controlled or ownedlocally. This evidence only reinforces the view that it isusually unrealistic to expect people who have lost their jobsin an essentially manual heavy industry, such as coal mining,to have the entrepreneurial skills necessary to make a successof business ventures on their own without extensive – andhence costly – support.

Significant conclusions that can be drawn from coal industryrestructuring experience in the UK in the period from themid-1980s to the mid-1990s include:● careful planning of the process is necessary if the

communities affected are not to be seriouslydisadvantaged socially and economically. In this respect,the policies adopted by the UK’s government of the dayappear to have neglected the long-term social andeconomic implications for these communities;

● even without the effects of mine closures, fundamentalsocial problems such as low educational achievements,poor housing and environmental degradation makeeconomic regeneration more difficult to achieve;

● this problem was reinforced during the early 1990s byeconomic recession within the general UK economy,making it more difficult for new companies to make asuccessful start;

● the formation of pressure groups, such as the CoalfieldCommunities Campaign, can bring significant benefits,especially where there is recognition of commonproblems on an international basis. Campaigning for theestablishment of EU’s RECHAR programme can becredited to the EUR-ACOM grouping of suchorganisations, while their continued monitoring ofgovernment actions helps to maintain public and politicalawareness of the situation;

● in terms of job search assistance, there was markedreluctance on the part of a significant proportion ofex-miners to make use of BCC’s JACCS scheme, eitherbecause of poor communications or through mistrust.Where employers are providing this type of service, it isvital that everyone affected by redundancy be madeaware of the assistance that is being provided;

● many ex-miners who found alternative work were facedwith the periodic unemployment, while their incomeswere often markedly lower than their previous coal

industry earnings. In some cases, the majority ofemployment opportunities were part-time, low-paid andfor women, resulting in the need for a significant changein roles within ex-miners’ households;

● out-migration between 1981 and 1991 resulted in anestimated 60,000 men of working age leaving thecoalfields in search of work elsewhere, further damagingthe previous community structure. Those leaving werealso likely to have the most marketable skills;

● some research suggests that ex-miners using ‘informal’contacts – friends and family – achieved greater successin finding new jobs than by using the services providedby BCC, or by state- or private-sector employmentagencies. This infers a worrying lack of confidence in‘formal’ job-search provisions;

● the emphasis in job creation has been on attractingsmall- and medium-sized businesses to the coalfields; notonly is the financial risk lower but the number of jobscreated per unit of workspace is greater than for large,capital-intensive enterprises;

● few major employers have been attracted to the coalfieldareas, and with the exception of Nissan (car production)in northeast England, many of those that have beenestablished are involved in areas such as electronics andmicrochip production. The subsequent closure of twosuch plants in northeast England, and delays incompleting one in central Scotland only reinforced therealities of the coalfields now having to compete forinvestment in an increasingly global economy;

● having good communications infrastructure is anothercritical benefit in attracting new employers. Theemphasis on new link roads in the Dearne Valley districtshows the recognition given to this, while conversely thelower success rate in attracting inward investment to thevalleys of South Wales can largely be attributed to theirgeographical isolation from main road and railcommunications; and

● it is essential for good communications to be maintainedbetween all of the parties involved in regeneration on thisscale. Where there is antipathy between them, asoccurred in the UK in the case of central and localgovernment, and central government and the miningtrades unions, or a lack of coordination in theimplementation of programmes aimed at offsetting thesocial and economic impact of the closure of any majorindustry, the fallout will invariably end up on those whocan least handle it: the communities directly involved.


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9 Evaluation and guidelines


Mining of any description, whether for coal, metals orindustrial minerals, has the ability to shape the economic andsocial structure of surrounding communities in a way unlikethat found in other heavy industries. Its position as oftenbeing the lead stage of industrial development within adistrict also sets mining apart from those sectors – and theirparticipants – that develop later. Throughout most of thecountries of Western Europe, coal mining provided thefoundation for industrialisation and, with the rise of theservice-sector (or post-industrial) economy and majorchanges to world energy supply patterns, it has been one ofthe hardest-hit by restructuring.

Key factors that differentiate between ‘Old World’ coalmining and the newer generations of producers elsewhereinclude the size of the former industry both in terms ofoutput and employment, its longevity, and the massiveinfrastructure that developed around it – not only throughthe construction of railways and canals, but also in theprovision of housing, community welfare facilities andeducation. Supply chains, both technical and commercial,extended throughout the mining districts and beyond,providing a substantial second tier of employment. Modernmine developments, by contrast, often tend to be based onrelative small reserve areas that can only support productionfor a limited period from a highly capital-intensiveoperation. Nonetheless, the sense of identity thatcharacterises mining is universal, being reflected in socialand cultural aspects of mining community life, and in thecamaraderie that exists within mining society.

Economic circumstances changed dramatically throughoutWestern Europe during the second half of the 20th Century.From a region still endeavouring to recover from the effectsof the Second World War, Western Europe has beentransformed (although by no means homogeneously) intoone of the world’s leading economic powers. During thishalf-century, the region has benefited enormously from thediscovery of new indigenous energy sources and from thechanging political structure within Europe as a whole, suchthat energy supply criteria have reverted from ensuring asubstantial level of self-sufficiency to seeking low-costsources elsewhere. In general, there has been a move awayfrom state intervention in most aspects of daily life togreater reliance on market forces, manifested though theprivatisation of formerly state-owned industries and publicservices, and the deregulation of utilities.

Major structural economic changes, such as have occurred inWestern Europe since the 1980s in particular, inevitably carrya cost as well as providing benefits, and in the case of energysupply, that cost has been bourne almost exclusively by thecoal sector. In none of the six countries studied here does thecoal industry of 2001 bear much resemblance to that of 1951;indeed, two of the six no longer host deep coal mining at all.As demand for coal has fallen, so has production, and ascapacity has reduced, so has the work force.

This chapter reviews the experience that has been gained incoal industry restructuring throughout Western Europe overthe past 50 years, and endeavours to highlight the successesthat have been achieved in handling the social and economicconsequences for the communities and districts mostaffected. It does not intend to draw direct comparisonsbetween the wider policies adopted by individual nationalgovernments within the region, although it is perhaps statingthe obvious to note that those countries where restructuringhas been managed under a long-term programme haveachieved a better outcome for those directly involved thanthose in which restructuring has been hurried.

In the long term, society has to carry the cost of restructuring,whatever approach has been adopted. Provision has to bemade for investment in attracting new employment to theaffected areas, in training former miners for their newoccupations, in supporting those who cannot find alternativework, and in funding early retirement schemes for peoplewho otherwise would have been net contributors to statebudgets rather than net recipients of benefits. Suchconsiderations will inevitably take many years to work out ofthe system.

9.1 The mining psyche: a strongsense of community

A common thread running throughout the coal miningindustry in Western Europe, and indeed elsewhere in theworld, is the sense of ‘belonging’ to a community. Built upover many years, this sense of inter-dependency lies at theheart of coal mining life – both in the working environmentand in the wider social and cultural structure. Even where thecoal industry is only a fraction of its previous size andeconomic importance, the fellowship between the peopleinvolved in it continues, albeit under severe pressure insituations where there is widespread financial hardship withinthe community. This solidarity is an important asset thatneeds to be recognised and channelled, for example throughcommunity-based schemes aimed at local economicregeneration.

It is also important to recognise the fragility of this sense ofcommunity when these pressures become too intense, anappropriate example being where an isolated community isleft without adequate employment opportunities and there issubstantial out-migration amongst the younger people. Inaddition, former miners risk losing their position within thesocial structure, a position that was often based on theirrelatively high earning capability. On a personal level, thiscan readily lead to loss of self-esteem, as well as reducing therole model effect for younger people within the community.In such cases, the whole social fabric of the community isdamaged, with the individual being left to bear the brunt ofeconomic deprivation without the peer support that wouldhave been evident in the past. Again, decision-makers have to

realise the potential consequences where this is allowed tohappen, and which are discussed in more detail in Section 9.3(below).

While the immediate aim of restructuring – whether it is incoal mining or any other industrial sector – is either toproduce a viable production base or to remove once and forall the cost implications of maintaining a loss-makingenterprise, economic regeneration must be an integral part ofthe entire programme if the effects of restructuring onaffected communities are to be minimised. It is, however,difficult to engender a sense of continuity within acommunity where the principal, or perhaps sole source ofemployment has gone.

9.2 Maintaining economic activity

The extent to which communities are affected by therestructuring of their major employer obviously depends onthe measures that are put in place to maintain economicactivity in the area. Where such efforts are successful, thesocial consequences for these communities can be positive.Where they are not, the risks of exacerbating socialdeprivation are very real indeed. However, it is important torealise that such statements only offer a gross simplificationof the real situation, since economic replacement orregeneration cannot just be imposed on a ‘top-down’ basis.Participation is necessary from all of the parties involved,including the individuals who are most directly affected. Thisin turn demands a positive response from such people, undercircumstances in which it may be very difficult indeed forthem to reconcile their changed position with their previousjob security.

The ability to maintain economic activity within a formerindustrial area, rather than providing replacementemployment after the event, clearly helps to minimise theimpact of restructuring. From this point of view, efforts toattract new business to coal-mining areas have to runsimultaneously with – or preferably in advance of – therun-down in coal-mining employment. This, of course,presents problems in its own right, particularly in terms ofenvironmental dereliction (which is often a disincentive torelocation for new employers), and the education and skillsbase amongst the available work force (which has a directimpact on both training requirements and potential employerperceptions). There is thus a complex inter-relationshipbetween employment, education and the environment, withinand around which industrial restructuring and jobreplacement have to take place.

In virtually every case, the authorities in the six countriesstudied have emphasised the importance of small- andmedium-sized enterprises (SMEs) in the provision ofalternative employment. There are obvious benefits from thisapproach, not least of which are the lower start-up capitalrequirements, smaller work space needs and the ability ofnumerous small businesses, each employing relatively fewpeople, to provide a worthwhile number of jobs within anindividual district. The disadvantages of this approachinclude the relatively high rate of business failure, meaning


Evaluation and guidelines

that new employees may soon be returning to a saturated jobmarket, and the need for long-term support from localagencies in the provision of management and other types ofassistance. Large companies, by contrast, are more likely toinvest more in their plant and facilities, but require relativelyfew employees in relation to that level of investment.Although until recently large companies offered a betterchance of long-term commitment to a specific area,globalisation of production has led even major employers toreview individual operations on a much more regular basisthan in the past, with a greater willingness to relocate theirfacilities in line with shorter-term market conditions.

The only employer on a comparable scale to coal mining tohave established new plants in former coalfield areasthroughout Western Europe has been the car industry,examples including Renault in Nord-Pas de Calais, Smart inLorraine, Ford in Belgian Limburg, DAF (now Volvo) inDutch Limburg, Nissan in northeast England, and GeneralMotors in the Ruhr. Nearly all of these are now fairlylong-standing investments, and in most cases were reliant onthe availability of substantial fiscal inducements from thegovernments involved. In point of fact, most major industrialinvestment commitments now require some form ofgovernment support, with companies increasingly holdingwhat amounts to a fiscal ‘beauty contest’ in order to securethe most attractive grant packages from competinggovernments. Meanwhile, competition for central fundingalso exists at an inter-regional level within countries, withmunicipalities in former coalfield areas often ill-equipped toparticipate in this type of bidding process as a means ofassisting wider economic regeneration (Bennett and others,2000).

Governments can, of course, play a more direct role inproviding alternative employment, as the Dutch caseillustrates. The relocation of government departments to areassuffering higher-than-average unemployment helps to createnew job opportunities, although it is open to questionwhether former miners represent suitable candidates for, say,work that involves purely clerical tasks.

This in turn raises the question of the suitability of theexisting work force for any new employment opportunities,and vice versa. People who have been predominantlyinvolved in manual work will have greater difficulty adaptingto assembly line or service-sector jobs, while light industryand the service sector in general often offer jobs mainly forwomen, rather than men.

9.3 The risk to social structures

Any inability or unwillingness on the part of government tooffer positive assistance to communities affected by the lossof the major source of income can easily result in a spiral ofeconomic decline that is difficult to break. While on thesurface, this can be manifested through the physicaldeterioration of community facilities such as recreationgrounds, schools and bus shelters, and through the closure ofshops or withdrawal of public transport services, there canalso be severe psychological effects on those most directly

affected. A number of studies carried out in the UK duringthe late 1980s and early 1990s investigated these problems.They provide stark evidence of the social cost that can beimposed on economically deprived communities, such as canbe created in former mining areas if adequate provision is notmade. In particular, several studies undertaken by the Centrefor Regional Economic and Social Research at SheffieldHallam University have focused on former coal-miningcommunities.

As Bennett and others (2000) note, with particular referenceto conditions in some of the most economically deprivedareas in the UK, ‘The coalfields still remain marginalisedplaces. Relatively well-paid, strongly unionised, often highlyskilled male jobs have been replaced by a smaller number ofpoorly paid, unskilled and often part-time jobs (for example,in call centres). Many of these jobs are taken by women,often the wives and daughters of ex-miners. Despite strongclaims about the creation of new jobs, such places areexperiencing high levels of economic inactivity (at least inthe formal sector) and the increasing feminisation of theirworkforces. This has gone alongside spiralling problems ofpetty crime, substance abuse, a decline in their local facilityand service provision, poor housing conditions and poorhealth – the hallmarks of dereliction and decline and allinextricably linked to growing poverty.’ Such descriptionsencapsulate the problems that communities can face ifadequate provision is not made to minimise the impact ofmajor-employer restructuring.

Perhaps one of the most worrying consequences of massunemployment is the breakdown of the social relationshipsthat formerly bound the community together. This can beparticularly damaging within smaller, more isolatedcommunities, and is by no means unique to the coal industry.

An individual’s age also has a significant bearing on his orher reaction to the loss of employment. As Wass (1994)notes, those worst affected tend to be those of prime workingage, while older people, whose expectations may have beenlower in any case, may not be affected to such an extent,especially if early retirement is an option. There is also aclear distinction between people who already havemarketable skills, such as mechanics, electricians and othercraftsmen, and those who are reliant on finding jobs withlower expectations – construction labouring, driving, securitywork and the like. One of the problems inherent in run-downindustrial areas is the reduction in general economic activitywhich, coupled with the effects of losing a principalemployer, means that without external stimulus there is goingto be very little demand for unskilled workers. Saturation bysuch people of what job market there may be leads inevitablyto low-paid employment, so fuelling the downward spiral ofeconomic decline.

9.4 Early retirement or alternativeemployment?

In all of the countries studied, early retirement has been oneof the major tools used by governments to reduce thecoal-mining workforce without creating the need for



additional new jobs. The terms and conditions for people totake early retirement have been very variable, and have oftenbeen adjusted repeatedly in response to changing conditions.One general trend has been the gradual reduction in thethreshold age at which eligibility is reached, not only interms of actual age, but also in relation to the length ofservice, former occupation and other factors. In France,Germany and Spain, the stage has been reached where veryfew remaining mine workers are eligible for early retirement,reflecting the progressive reduction in the average age of theresidual work force. A comparable situation existed in theUK in the late 1980s.

In a number of cases, acceptance of early retirement and thepayment of appropriate benefits has been conditional on theperson effectively ruling themselves out of the job marketuntil their normal retirement age. In practice, this does notmean that people do not work again, but that the official jobmarket is closed to them. In point of fact, it is probablyunrealistic to expect someone of between 40 and 50 years ofage not to take the opportunity for at least part-time work ofsome description, if only to relieve the boredom of de factounemployment.

Coupled with early retirement as a means of shedding olderworkers, most companies also adopted recruitment policiesthat meant that either no new workers were taken on, or onlythose needed to fill specific, usually technical vacancies.Spain is an exception to this, in that the current plan for coalincludes a requirement for new workers to be taken into theindustry as well as for jobs to be shed. It is difficult tovisualise the justification for this policy, since under thecircumstances, the money spent on training young people foran industry that most of the parties involved agree has alimited future, might be better spent on attracting alternativeemployment to the coalfields. In the long run,non-recruitment policies do become self-defeating in thatskills shortages develop amongst the remaining work force,as Charbonnages de France (CdF) has found. Encouragingly,Scottish Coal announced the first recruitment for Scotland’scoal industry in 20 years at the beginning of 2001, includinga number of apprenticeship places (World Coal, 2001).

For those ineligible for early retirement, the only option hasusually been to seek alternative work. The amount ofassistance that former miners have received in this contexthas been very variable, ranging from one-to-one placementsby their former employer at best, to virtual abandonment atworst. In most cases, ex-miners have received a reasonablelevel of assistance, although usually with few guaranteesrelating to the suitability of any alternative work they mayfind. In this context, CdF’s approach of providing a two-yeartrial period with the option of returning to the company wasunusual, and would not now be financially supportable.

People’s willingness to travel or to move from one area of acountry to another in search of work can have a significantbearing on their success in finding alternative employment.Out-migration has been a feature of many coalfield areas overthe past 30 years and more, having been used both by thecoal producers themselves to redistribute their workforcesand by their former employees once mines had closed.

However, it has to be understood that this can bring genuinehardship, especially in the case of the close communities sotypical of the coal industry. Experience has shown that ittends to be the younger, better-skilled people that are mostprepared to move away, leaving a core of older workers whowill inevitably find greater difficulty in obtaining new workwithin the coalfield areas. Decision-makers need to recognisethat there is often a limit to the numbers of former miningindustry employees who can make the break, both physicallyand psychologically, with what has often been a veryprotective working and living environment, and must plan forthe future with this in mind.

9.5 Inter-agency relationships

There is a strong correlation between the successfulimplementation of economic regeneration programmes and thelevel of cooperation that exists between the various agencieswith responsibility for different aspects of their operation. Thisis clearly demonstrated in the long-term outcome ofprogrammes that have been carried out in both Germany andFrance, where relationships between the various levels ofgovernment, the trades unions, the business sector and otherinterested parties have been, for the most part, generallypositive. Where coal industry restructuring has involved asmaller number of operations and hence fewer people, as in theNetherlands and Belgium, the establishment of managementcommittees that represent the various interests involved hasalso been shown to be helpful through providing a day-to-dayfocus around which economic regeneration can proceed.

By contrast, where inter-party relationships are poor, eitherfor political or ideological reasons, it is clear that successfuleconomic regeneration is much more difficult to achieve.Such a position is, unfortunately, illustrated by the situationin the UK, where there was a strongly confrontational aspectto coal industry restructuring during the 1980s and early1990s, and in Spain where the strongly protective attitude ofthe trades unions and the political differences that existbetween the central and provincial levels of government havedelayed the implementation of appropriate policies.

There also appears to be a significant benefit where governmentat the regional level is able to make and implement decisionsrelating to economic regeneration. This, of course, infers anappropriate level of managerial autonomy and the establishmentof a financial structure that gives regional authorities budgetaryresponsibility. The presence of an effective regional tier ofgovernment allows planning authorities to focus better on thoseareas within their jurisdictions that require most assistance.Where there is a more ‘top-down’ approach, on the other hand,central governments may have too many programmes that arecompeting for national budgets, to the detriment of areas thatare already suffering deprivation and do not have the resourcesto attract adequate support.

9.6 Maintenance of communityservices

In the past, it was common for mining companies, both



state-owned and in the private sector, to construct acomprehensive infrastructure to support their operations. Thisis by no means unique to coal mining, and even today aconsiderable portion of the cost of new mining ventures inremote locations is often associated with aspects such asemployee accommodation, social facilities and services. Evenwhere earlier private-sector mining operations werenationalised, the associated infrastructure was usuallyincorporated in the package. This often included a substantialamount of housing, for example, with the tendency forstate-owned companies – at least since the 1980s – to sell atleast a proportion of their housing stock into the privatesector. This was the case in Belgium and the Netherlands,although in France CdF still has a portfolio of nearly 100,000houses, nearly 60% of which remain occupied by ex-minersand their dependents.

In other cases, housing (together with its maintenanceresponsibilities) was transferred to local municipalities, aswere welfare facilities. The assumption of such additionalfacilities can burden local authorities with higher costs,often at a time when revenues from business taxes arefalling in response to the downturn in local economicactivity. For this reason, the French Ministry of the Interiormakes what it refers to as ‘exceptional subventions’ tomunicipalities in these circumstances, amounting to 50% ofthe additional cost in the first year, 30% in the second and10% in the third, by which time the facilities taken overshould be integrated into the municipal infrastructure (Courde Comptes, 2000).

Although less contentious in Western Europe than perhapsin some other parts of the world, the issue of how thetransfer of responsibility for social services is handled stillneeds careful consideration. As Jackson (2000) notes,mining communities may well have had the benefit ofhigher standards of services in the past, leaving theauthorities to whom responsibility for their continuedprovision is devolved with a dilemma. ‘The social facilitiesprovided by mining companies in many countries for theiremployees and the local population may be markedly betterthan those provided normally by government agencies. Thismay not be a major problem whilst the mine is inoperation, but if closure occurs and services previouslyprovided by the company have to be taken over bygovernment (or provided by the Coal Ministry or similarorganisation and now taken over by a local municipality)then the government is faced with a difficult dilemma:should it maintain the higher level of services (and thussubsidise the ex-mining area at the expense of the rest ofthe country) or should it allow the level of serviceprovision to sink back to the level of ‘normal’ provision?’.Such a situation existed in France in relation to theprovision of health care for miners, and was only resolvedonce the level of provision to the general population wasimproved.

Taken on the more local level, communities for whom themain source of income has been lost still need theirmunicipal services to be provided. Public transport isespecially important as a means of ensuring that people arenot effectively cut off from alternative sources of work.

9.7 Attracting alternativeemployment

As noted in Section 9.2, a common theme of economicregeneration programmes throughout Western Europe hasbeen strong reliance on small- and medium-sized enterprises(SMEs) for new job creation. It is not that there is no longer aplace for larger businesses within the post-industrialeconomy, it is simply easier and quicker for SMEs to starttrading, and hence provide work.

Most countries, and indeed many regional authorities withincountries, have established organisations dedicated toattracting inward investment. In France, SOFIREM providesan appropriate example, although even in this case, thecompany (which in the past had a specific mandate inrelation to former CdF employees) works alongside othernational, regional and local organisations, all of which are inthe business of attracting new employment. It is thereforeimportant that there is a high level of coordination andcooperation between the various agencies involved.Duplication of effort is expensive, while potential investorsmay be confused if a number of organisations are pitching fortheir business within the same area. The concept of a‘one-stop shop’ has a great deal to commend it in thiscontext.

Former coal mine sites typically provide a considerableamount of land for redevelopment, although almostinevitably, some environmental rehabilitation will have to becarried out before it can be put to new uses. This is anintegral part of the process of attracting new employment,and may best be handled by specialist organisations; EnglishPartnerships in the UK and EWA in the Ruhr coalfield areexamples. How these companies are funded depends largelyon the initial state of the former mine sites, how much needsto be spent in restoring them and building new infrastructure,and their final value. In the case of the Netherlands, whereSouth Limburg occupies a very favourable geographicalposition within the European marketplace, the SSO was ableto recoup much of its costs through the sale of restored landfor housing and for industrial development. This system offunding would not be appropriate, however, for areas in lessattractive business locations, where land values would belower.

A major potential problem for former mining areas is that21st Century SMEs are often more involved in ‘high-tech’businesses rather than the type of employment that would beappropriate to manual workers. Even joinery ordouble-glazing manufacture – typical of small-scale industrialbusinesses – require skills that have to be taught and learnt,while another important consideration is the availability oflocal markets for new businesses’ output. Districts in whichthe economy is already depressed are unlikely to supportsubstantial sales of this type of product, or an increasingnumber of car repair shops, for instance. Businesses that aremore likely to attract sales in a wider marketplace,meanwhile, are also more likely to require greater levels oftechnical skill amongst their workforces.

Opportunities for self-employment by former miners appear



to be very limited, unless individuals can use skills orinterests that they already have. Although self-employment iscertainly an increasingly popular way of earning a living in anumber of countries, to make a success of it requires a levelof entrepreneurial capability and financial backing for whichvery few ex-miners would realistically be equipped.

9.8 Job search assistance

Redundancy is one of the most stressful times in any person’slife, especially where the previous employment has beenwithin an essentially paternalistic, structured organisation. Insuch circumstances, the people affected may never have hadto look for alternative work before, and in consequence findthe prospect extremely daunting.

Again, Western European experience shows a wide range inthe assistance provided to former miners during job-searching.The bare minimum is represented by personal counselling andassistance with parts of the application process that may beunfamiliar. At the other extreme has been the actual placementof candidates in jobs that have been identified specifically asbeing suitable for a particular individual.

Where the intention is to ensure that a high proportion ofthose facing redundancy find new work, then there also hasto be a concerted effort to provide as much help as ispractically possible. However, it is also important to realisethat there may be budgetary limits to the level of assistanceprovided, and that in some cases people may not wish – forwhatever reasons – to make full use of what is offered. AsDonkier (1991) notes, in Belgium almost half the ex-minerswho found alternative employment did so through the use offriends and family members as a means of introduction.Research by Critcher and others (1995) into job searchexperiences of former UK miners echos this, with personal orfamily contacts accounting for over half of the successful jobplacements within their study group. The British experiencereported here also suggested that many of these formerminers were sceptical about the assistance services providedby British Coal, and instead made greater use of normal stateemployment organisations.

9.9 Provision of training

In all of the countries studied, training has been offered as away of providing former mine workers with skills that willmake them more employable in alternative job markets.However, the extent to which this has been done, and thesequencing between redundancy, training and finding newwork, have varied considerably from country to country.

The most paternalistic approach has probably been thatadopted by Charbonnages de France, in that the trainingprovided was usually specifically designed to meet the needsof the candidate in relation to the requirements of an identifiedjob vacancy. At the other extreme, teaching ex-miners only theskills needed to carry out low-paid manual or driving tasks inan economic environment in which these are already in shortsupply seems almost counter-productive.

The way in which training is provided – whether by themining company itself or through independent sources – canhave a bearing on the value of the training in helpingex-miners find new work. Experience from both France andthe UK suggests that there may be benefits in employing theservices of outside providers, CdF reporting that this systemgave potential employers greater confidence in the trainingoffered. In the case of the UK, a significant minority of thework force did not take training courses offered by BritishCoal Enterprise, mainly from a sense of mistrust and forideological reasons. Ideally, training has to be made availablewith a clear purpose in mind, which requires closecooperation between the providers, potential employers andthe other agencies involved. While such an approach mayincur higher costs in the short term, these are outweighed bythe long-term benefits in relation to future job security, andhence an ability to maintain economic activity withinregenerating areas.

9.10 Provision of business supportand financial advice

In addition to direct assistance to individuals in relation toseeking new work, several economic regenerationprogrammes have included provision for nurturing SMEs intheir formative years. Recognising that such businessesrepresent much higher risk in terms of early failure, it isclearly beneficial to the community as a whole that thisfailure rate should be minimised. Responsibility for theprovision of business advice typically rests with localmunicipalities or development agencies; in Asturias,SODECO fulfils this function through its business supportactivities, sustaining small-scale businesses during theircritical early stages.

At the individual level, past experience has shown that thereis often a need for financial planning advice for people whohave been made redundant, especially where relatively largelump-sum payments are involved. UK-based research hasindicated that ex-miners and their families were poorlyserved with independent financial advice, and were thus at adisadvantage in terms of prioritising their commitmentsduring the period of searching for new work.

9.11 Education

Where post-school education was previously available, inmost coalfield areas this was targeted specifically at the needsof the coal industry. All too often, however, school-leavershad little incentive to continue in education, preferring tostart work immediately with the possibility of in-servicetraining later in order to acquire specific skills. Coal industryrestructuring has thus resulted in the need to redirect theemphasis of tertiary technical education to meet therequirements of other employers.

A number of Western European governments have madespecific efforts to extend the range of educationalopportunities available within former coalfield areas, theintention being to provide the next workforce generation with



a much more robust educational base than was previously thecase. The proliferation of university facilities within the Ruhrcoalfield district is a case in point, as is the relocation of partof Oviedo University to the outlying mining centre of Mieres.There is also the long-term aim of attracting furtherinvestment in ‘high-tech’ businesses to these areas, tappingthe potential for symbiosis between the universities andindustry.

In addition to tertiary education, there remains the need foradequate funding for primary and secondary schooling withincommunities affected by industrial decline. In this area,proactive measures are often needed to ensure that the qualityand standard of education does not suffer even though thecatchment area for the schools involved has lost its economicbase. Not only is this vital for ensuring that the nextgeneration is better educationally equipped for facing thechallenges of future work, but it can also assist in helping toreduce unwanted social aspects of unemployment such aspetty vandalism and crime.

9.12 The costs involved

However industrial restructuring and all its consequences arehandled, the costs are inevitably going to be enormous. Inmost cases, governments have adopted a two-prongedapproach, presenting the opportunity for early retirement foras many as are eligible, and providing some combination ofredundancy payments, assistance in finding new work, andattracting alternative employment for those still of workingage.

The distinct status accorded to miners in many countriesmeant that in the past governments frequently establishedindustry-specific pension and welfare schemes. In some casesthese cover provisions for early retirement, in others they donot. Typical threshold ages for eligibility fell progressivelyduring the 1980s and 1990s, and are now mainly 50 or belowfor underground workers. In some instances, as in Spain,underground miners can theoretically retire at around40 years of age, meaning that the state, either directly orthrough the mechanism of some industry-specific scheme,will have anything from 15 to 25 years’ liability before suchindividuals reach the normal pension age of 65. In theSpanish example, such obligations could reach sums ofUS$220,000 per person (without index-linking) over 25 yearsbased on current average pension levels, although themaximum theoretical cost allowable under the Spanish earlyretirement system could be nearly three times as high.

Similarly, early retirement provisions in the UK require anannual budget of some £60 million (US$90 million), over andabove initial payments that involved an annualised averageoutlay of £130 million (US$200 million). Meanwhile, formerunderground workers in Germany can expect to receivenearly US$100,000 in benefits over the first five years ofearly retirement, while their counterparts from the lignitemines in the eastern länder receive between US$10,000 andUS$15,000 per year in early retirement income.

For those still in the jobs market, lump-sum payments have

usually been related to factors such as age and length ofservice. In the UK, amounts ranged widely up to a maximumof some £40,000 (US$60,000), while in Germany suchpayments have been US$25,000–30,000 in the hard coalindustry and US$2500–5000 for former eastern ligniteworkers. Spanish practice could theoretically encompassseverance payments of up to US$150,000. In France, bycontrast, the long-term emphasis has been on jobreplacement, rather than severance, with consequently higherspending on training.

The costs involved with job creation and associatedassistance programmes are much more difficult to quantify,given that it is virtually impossible to gain a precise measureof the actual number of wholly new jobs that result from anyparticular programme. Nonetheless, some comparisons havebeen made. IMCL (1998) estimated that the average cost tonational governments per job lost through coal industryrestructuring was ECU45,300 (US$54,400) in the UKbetween 1985 and 1994, ECU61,500 in France (1986-1991)and ECU82,300 in Belgium (1987-1992). These figures didnot include the cost of attracting new employment to thecoalfield areas. Meanwhile, van de Kraats (1997) also drew acomparison between the cost per miner’s job incurred duringrestructuring in the three contiguous mining districts ofBelgian Limburg, Dutch Limburg and the Aachen coalfield inGermany, in which the estimated costs were US$225,000,US$150,000 and US$100,000 respectively (at currentexchange rates).

Separately, Fothergill and Guy (1994) estimated the costincurred by British Coal Enterprise (BCE) per job created asbeing between £4300 and £5300 (US$6900–8500) for itsworkspace and business funding activities, and £16,600(US$26,600) where outplacement and retraining wasinvolved. These authors also note that even in the early1980s, ‘traditional regional policies’ aimed at job creation inthe UK (such as capital grants to businesses) typicallyincurred costs of £40,000 (US$64,000), suggesting that BCEwas able to operate at significantly lower costs than normaljob-creation schemes.

9.13 Community-based responses

The involvement of organisations representing thecommunities most affected by coal industry restructuring hasbeen a significant feature of the process in Western Europe,especially since the mid-1980s. The impact of pan-Europeanassociations, such as EUR-ACOM, on national and EUpolicy has largely been beneficial to the coalfieldcommunities for which they provide a lobbying voice. Theability of an association comprising small individual units –in this case, the municipalities in which coal mining haseither contracted or gone altogether – to bring its memberstogether such that their common needs can be highlighted togovernments has been clearly demonstrated here.

In contrast to this ‘umbrella’ approach, communityparticipation is also recognised as being valuable at a locallevel, to the extent that the EU and national governments bothactively promote community involvement in regeneration and



social projects (Gillard and others, 2000). Nonetheless, asense of realism is also needed, in that those living withineconomically deprived environments often need substantialfinancial and administrative support in order to achievemeaningful results from community-centred initiatives. Inaddition, small-scale, low-development-cost projects usuallyhave limited abilities to provide what these communitiesdesperately need – new, adequately-paid work.

Bennett and others (2000) list a number of areas in whichcommunity-based organisations provide valuable assistanceto local populations. Focusing mainly on services, whichrequire a higher level of labour input than manufacturing,these include:● the provision of subsidised furniture for those on social

benefits;● savings and loans opportunities;● out-of-school activities for young people;● drop-in facilities and counselling;● crèches and child-care provision;● courses and training;● transport provision;● arts and cultural services;● landscaping services; and● café and catering provision.

As well as providing employment in their own right, suchservices also provide the opportunity for volunteer workers tofind a route back to paid work once they have acquired newskills in specific, marketable areas. Gillard and others (2000)also refer to the case of a community-based construction,insulation and environmental landscaping company, set up asa commercial entity but with a strong emphasis on providingtraining and apprenticeships for young people withineconomically deprived areas in Sheffield. Although supportedby funding from the EU’s Social Fund and from UK centralgovernment regeneration grants in terms of its sociallyorientated activities, the company operates within the normalcompetitive business environment.

9.14 Guidelines

The restructuring or closure of any major industry isinevitably a highly emotive and stressful event for everyoneinvolved. This is true whether it is a large-scale state-runenterprise, a major private-sector company or merely the solesignificant source of employment within a community, as isoften the case in the mining industry worldwide. Theresponses of the major players involved – the companies,local communities, local and national governments, tradesunions and financial institutions – are fundamental to thesuccess or failure of any such restructuring in terms ofsecuring the social and economic future for the people mostaffected. Good liaison between them may not guaranteelong-term prosperity for the communities involved, but atleast it provides the foundation for future economicregeneration. By contrast, poor communication and the lackof an integrated approach to regeneration are key ingredientsfor long-term economic and social deprivation.

Given the restrictions imposed by these gross generalisations,

and without wishing to appear either patronising or overlyacademic to those facing major social and economicupheaval, it is nonetheless possible to establish some basicguidelines that can assist in promoting a successful transitionfrom the old employment order to the new.

In terms of overall restructuring strategy:● Long-term planning of restructuring allows the

appropriate alternative employment and new investmentpromotion infrastructure to be put into place before it isneeded. Unless this is done, any existing services will beswamped by the new demands being placed upon them,leading to an unacceptable delay between jobs being lostand new opportunities being created. In addition, newemployers are more likely to invest in or relocate toareas that are already economically active, and will needadditional incentivisation if economic and socialdepression has already become established.

● A high level of communication is needed between all theparties involved. Experience has shown that it is muchharder to achieve successful economic regeneration insituations where there is antipathy between the majorinterested parties, be they trades unions, governments orthe companies themselves. It is vital that there is fullunderstanding of the potential problems facing theaffected communities, and general agreement as to thebest course of action to be taken to minimise the effectsof industrial restructuring.

● In situations where there is consensus, the establishmentof a guiding management structure has been shown tooffer significant advantages in the day-to-dayimplementation of regeneration projects.

● All levels of participation in economic regenerationprogrammes can benefit through the use of people whohave specialist skills in locating and procuring sources ofproject finance, from the commercial sector,governments and international agencies alike.

● Economic regeneration strategies must address the needsboth of the work force that has been directly affected byrestructuring, and of the coming generation. These maynot be immediately compatible in terms of eitheraspirations and abilities, since the future workforce hasthe opportunity to achieve higher skill levels throughcontinued education while the most pressing need forthose made redundant is to maintain a living income andmeet existing liabilities.

● Early retirement has been widely and successfully usedas a means of reducing the number of people for whomnew work is required. Such a solution has, of course, animplicit long-term liability to support people of workingage and ability, as well as changing them from beingrevenue contributors into social security recipients. Thereis also the question of the loss of skills that cannot thenbe passed on to younger workers, while the opportunityremains for people who are officially disqualified fromworking to participate in the ‘grey economy’.Consideration needs to be taken of ways in which olderpeople, who are still of working age, can contribute toeconomic life in their communities without beingpenalised financially.

● Improved education and training are widely seen asbeing vital components of social and economic



regeneration. While in the past, mining communitieshave often suffered from low levels of achievement informal education, with subsequent training targetedspecifically at the needs of the mining industry, the nextgenerations will require much more comprehensiveeducation – up to tertiary level – in order to be able toparticipate successfully under future economicconditions.

● Small- and medium-sized enterprises are widely seen asoffering greater employment potential for the economicregeneration of deprived areas than large,capital-intensive companies. Nonetheless, largebusinesses can offer significant advantages in terms ofindirect employment with suppliers, and the analogy canbe drawn with commercial shopping developments,where large ‘anchor stores’ provide an environmentwithin which other businesses can participatesuccessfully.

● There has to be an appreciation of the change in‘mind-set’ that needs to take place on behalf of bothemployers and employees when people leave a stronglystructured working environment, as in a state-controlledindustry, for work under free-market conditions. Thiswill inevitably take some time to achieve.

In terms of the communities affected:● The authorities need publicly to demonstrate a

commitment to maintaining economic activity incoalfield areas, and that they are not abandoning them toeconomic decline. There is thus a need for close liaisonbetween the communities and those responsible forimplementing regeneration programmes, so thatcommunity requirements are adequately addressed.

● It is important to recognise the sense of loss –comparable to bereavement – when a major source ofemployment within a community closes or down-sizessignificantly. Allowance needs to be made for this in theshort term, although it is also essential for people to beable to be able to look ahead in terms of policyimplementation.

● Communities still need a focus and a sense of identity,even if the former major employer has gone. For thisreason, environmental regeneration that incorporatessome features of the old industry, as well as usingrecognised community facilities, is important so that thecommunities can make the transition to the future socialand economic structure while still being able to relate tothe environment in which many will have spent all theirlives.

● Community services need support from government atall levels in order to maintain continuity for the residentsinvolved. This may include the need for additionalfinancial support for social facilities, such as libraries,schools and clinics, as well as higher subsidies for publictransport. This is especially true where responsibility forthe operation of social facilities has been transferredfrom the mining company to the local authorities.Consideration also needs to be given to reducing localbusiness taxation on community shops so that these cancontinue to provide essential services to residents duringthe economic regeneration process.

● An early appreciation has to be gained of the housing

requirements in affected communities, especially whereconditions of employment have included free orsubsidised housing for coal industry workers. On-goingmaintenance requirements need to be assessed, togetherwith the costs involved in bringing inadequate housingstock up to acceptable standards.

● Support is also needed for the establishment andmaintenance of ‘self-help’, or community-basedorganisations that can provide essential services to localpeople. While these are often staffed by volunteers, theycan play a useful role in maintaining a sense ofcommunity, as well as providing a means for people togain new skills with which they can re-enter theemployment market.

● If there is no likelihood of new employment beingattracted to geographically remote communities in whichcoal mining has ceased, it may be better for theauthorities to budget for resettlement of the inhabitants,rather than providing long-term support for services for anaturally diminishing population.

In terms of the individual:● People affected by industrial restructuring need

individual support from organisations that they feel thatthey can trust: this may not be their former employer ifrestructuring has taken place under conditions of socialconflict.

● Retraining has to be appropriate to the needs ofpotential future employers, who ideally should beinvolved in the training process, even if this is fundedby government.

● Advice on job searching, training and skills requirementshas to provided be on an individual basis. Those affectedby industrial restructuring need to be encouraged tomake use of such services, especially in situations wherethere has been poor acceptance of the need forrestructuring.

● Independent financial advice is also essential, especiallywhere lump-sum payments in compensation forredundancy are involved.

● Some form of transitional income support may benecessary, in particular where former miners have to takelower-paid work.

● It is unrealistic to expect most ‘traditional’ industrialworkers, such as coal miners, to have the entrepreneurialskills necessary to become successful inself-employment, although this has often been promotedas a key means of providing alternative employment.

In terms of cost implications:There is no cheap way to restructure or close along-established industrial sector. The responsible authoritiesneed to make adequate budget provision for:● the physical restructuring or closure process;● site environmental rehabilitation;● the construction of new infrastructure and commercial

facilities;● the attraction of new employment through promotion and

the provision of fiscal incentives;● assistance to former employees who remain in the work

market with job searching and training;



● improved education facilities for young people and thosewith special needs;

● long-term financial support for those taking earlyretirement;

● social security benefits for the unemployed or medicallyincapacitated;

● long-term pension support for the retired; and● continuing support for community-based services.

Fifty years of experience in Western Europe havedemonstrated that it is possible for former coal miningdistricts to recover from the trauma of major job losses, andto re-establish a viable economic base. To do so requires aconcerted, long-term effort on the part of everyone involved.As IMCL (1998) states, ‘It is important to appreciate thatindustrial restructuring does not imply purely negativeconsequences for society, but with the appropriate policiesand positive commitment and resources, may lead to therenewal of individual skills and career prospects, and theregeneration of coalfield communities and regions.’

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Appendix: Recent experience outside Western Europe


This report has focused exclusively on experience gainedduring the restructuring of coal production in selected WesternEuropean countries. As noted early in the introduction, thisregion provides the greatest concentration of examples of thelong-term effects of job losses and economic regeneration oncoal mining communities to be found anywhere in the world.Nonetheless, Western Europe is by no means unique in thiscontext; since the late 1980s, many formerly centrally-plannedeconomy countries have been engaged in wholesale industrialredevelopment programmes, including coal industryrestructuring. No less traumatic for the people involved havebeen successive waves of coal production consolidation inNorth America, affecting often isolated communities that grewup solely on the basis of servicing local mines (Martin, 1994).

This appendix to the main report reviews briefly examplesfrom both of these situations. Experience from the CzechRepublic illustrates the effects on coal industry communitiesduring the transition from national central planning to marketeconomics, while the privatisation of the Cape BretonDevelopment Corporation’s mining interests in Nova Scotia,Canada, has provided the opportunity to examine themeasures taken elsewhere than in Europe.

A1 Czech Republic

The Czech Republic was amongst the first of the formerEastern Bloc countries to address the need for coal industryrestructuring, particularly in hard coal production. In someways, the task was made easier by the relatively small scaleof the industry compared, for instance, to those in Poland orUkraine, although the social and economic effects of thereduction in capacity that continued throughout the 1990swere hard on the communities involved.

Hard coal production is centred on the North MoravianOstrava-Karviná basin in the northeast of the country, withthe Kladno basin previously hosting some output. During the1990s, total Czech hard coal production fell from around22 Mt/y to about 14 Mt, with employment decreasing muchmore rapidly. From a total of 103,700 in 1989, the numberremaining in the coal industry fell to 23,700 in 1999, with theprospect of a further 8000 jobs being lost by 2004 (Šñupárek,2000; World Coal, 1999). Mines operated by the Kladnoenterprise were amongst the first to be closed, together withsome in the Ostrava district, leaving the bulk of the residualproduction located around Karviná (WEC, 2000).

As in the lignite industry in former East Germany, the Czechhard coal mining enterprises had much wider socialresponsibilities than just coal production. In consequence,around 30,000 of the jobs nominally lost during the 1990swere actually transferred to other cost centres, while a further17,000 people retired either on age or health grounds. The netloss in employment to the industry was thus 33,000 directmining jobs (Šñupárek, 2000).

Following its creation in 1990, the principal hard coal producerin the Ostrava-Karviná coalfield, Ostravsko-karvinské Doly(OKD), adopted a policy of hiving off its non-core activitiesinto other companies, so accounting for many of the jobstransferred out of the industry. The closure of its Ostrava minesaffected some 15,000 people, although at the time it was able tooffer many of these alternative mining jobs at its Karvináoperations. The company also established a ‘job shop’ to assistthose who were unable or unwilling to move to another mine inthe area. During the early 1990s, it liaised extensively with theUK’s British Coal Enterprise in this area in an exchange projectfinanced by the UK government’s Know-How Fund. During thefirst 20 months of its existence, OKD’s job shop registered over1100 former mineworkers, with around two-thirds beingsuccessfully placed in alternative work (Walker, 1994).

Šñupárek (2000) notes that despite the rapid fall in headlinemining industry employment in the Ostrava-Karviná basin, itwas not until the mid-1990s that regional unemployment wasnoticeably affected; while from 1990 to 1995, unemploymentstood at between 3% and 5.5%, by 1999 it had risen to over16%. The rapid increase in tertiary industry – small,entrepreneurial establishments – during the early 1990smanaged to provide enough work to offset the effects of coalindustry restructuring, and it was not until the region’smetallurgical industries began to shed labour in the mid- andlate-1990s, coupled with general economic recession, thatunemployment began to rise significantly.

A lack of investment capital for establishing new industries inthe region has been the principal problem facing the Czechgovernment and the local authorities, while in the early1990s, there was little local experience in handling majorindustrial reorganisation projects. Typical supportprogrammes of the time included:● retraining programmes, mainly organised by labour

departments;● credit incentives for new, private-sector companies;● incentives in the form of advantageous rental rates for

former mining company property; and● local authority support for infrastructure development for

new industrial zones and parks.

During the latter part of the 1990s, these programmes havebeen extended by additional government support aimed atassisting employment in the region, including:● salary grants for employees in their first job;● grants for companies that create new employment;● tax relief incentives for companies investing in new

industrial premises; and● establishing the position of a government commissioner

responsible for economic development in the NorthMoravian region.

A2 Cape Breton

The economy of the island of Cape Breton at the north of the

Canadian province of Nova Scotia has traditionally beenreliant on two primary industries – coal mining and fishing.At the start of the 21st Century, both are in severe decline,with high unemployment amongst the 118,000 population ofmetropolitan Cape Breton. Since 1967, coal production hadbeen the responsibility of the Cape Breton DevelopmentCorporation (CBDC), a Crown (state) Corporation thatreceived some C$1600 million in financial support from thenational government over the 30-year period that it was inoperation. By the late 1990s, only two underground minesremained, and in September 1999, the CBDC announced theaccelerated closure of one of these for geological reasons.Previously that year, the government had decided to privatisethe CBDC itself, writing off its accumulated debts andsigning a letter of intent with Oxbow Carbon & Minerals Inc.for the transfer of its remaining assets (CanadianGovernment, 1999; CBDC, 1999b; 2000b).

The immediate impact of the closure of the Phalen mine wasthe loss of some 400 jobs, with a further 140 saved for onlyas long as salvage of the mine’s equipment took place. Thetransfer of assets to the private sector also involves a furtherloss of jobs as the residual workforce is trimmed from around500 to just over 400 (Acton, 2001).

In early 1999, the Canadian government announced a C$111million assistance package aimed specifically at:● an extension of the existing Early Retirement Incentive

Program (ERIP), created in 1996, by which an additional340 former CBDC employees could receive annualbenefits of up to C$22,900 subject to certain minimumage (48) and length of service criteria. The previous agethreshold had been 50 years. Following arbitrationbetween the various parties involved, the ERIP systemwas later extended to include all current CBDCemployees who had completed at least 25 years servicewith the corporation;

● severance packages for some 650 employees who wereineligible for ERIP benefits; and

● retraining allowances of up to C$8000 per employeetaking the severance package, with a budget ofC$5 million in total.

In addition, the government introduced C$68 million infunding to assist in the redevelopment of the Cape Bretonregion’s economy in general, to which the Nova Scotiaprovincial government later added a further C$12 million(CBDC, 1999a; ECBC, 1999). Nova Scotia also benefitedfrom C$21.3 million allocated between 1998 and 2000 aspart of the Canadian government’s Fisheries Restructuringand Adjustment Measures, targeted at communities affectedby the downturn in commercial fishing.

In mid-2000, the CBDC extended the benefits provided to itsformer employees to those involved in the transfer of assetsto the private sector. Designed to provide a ‘safety net’ interms of severance benefits, medical coverage, training andrelocation support should the new operator cut further jobsduring the first two years after transfer, the TransitionalSecurity Measure was not, however, available for employeeswho left the new operator voluntarily or for disciplinaryreasons (CBDC, 2000a).


Appendix: Recent experience outside Western Europe

In terms of regional economic regeneration, the EnterpriseCape Breton Corporation (ECBC) has the overallresponsibility for ‘promoting and assisting the financing anddevelopment of industry in the region, providing employmentoutside the coal-producing sector and broadening the base ofthe local economy’ (ECBC, 2001b). In addition to itsinvolvement with the promotion of replacement industry, thecorporation has an aggressive tourism marketing campaignand runs programmes for nurturing the entrepreneurial spiritof the region’s young people. Recent job replacementsuccesses have included 900 in a new ‘e-business’ venture byEDS Canada, and 100 through the C$45 million expansion ofa car components manufacturer, Tesma International. TheC$32.2 million cost of the EDS Canada project is beingfunded by the company itself (C$19.2 million), and theECBC (up to C$6 million dependent on the actual number ofjobs created, plus a further C$7 million as a ‘provisionallyrepayable contribution’ drawn from the Canadiangovernment’s C$68 million regeneration fund). Theprovincial government is also providing up to C$8.4 millionin payroll rebates if the project meets and maintains its jobtargets (ECBC, 2000a). Public-sector funding for the Tesmaproject includes C$2 million from the ECBC as a loan,non-repayable if job targets are met, plus C$500,000 as arepayable contribution, C$608,000 from Human ResourcesCanada and C$2.5 million in payroll rebates from theprovincial government (ECBC, 2001a).

A key part of the regeneration planning process for CapeBreton was the organisation of a series of public consultationmeetings, held throughout the island in late 1999 to allowboth individuals and community organisations to submitideas for economic renewal within the C$80 million specialfunding allocated to the region. The consultation panelresponsible for directing this process then submitted a reporton its findings to the federal and provincial governments,forming a basis for future policy and economic regenerationinvestment programmes (ECBC, 2000b).

Documents

Experience from coal industry restructuring