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Romania: New Hope for Distressed Mining Communities

April 3, 2006

CAMPULUNG, Romania – After the mine shaft tower and outlying buildings were blown apart with dynamite, their concrete remains were crushed into small granular pieces and poured down the shaft to fill the void of the abandoned mine. Through a trap door you can see the packed debris: fifty years of history reduced to dust.
Four-hundred-fifty people used to work at the Godeni mine set in the scenic hills of Campulung in southern Romania. Cows graze there now and the air is filled with the buzz of honey bees.

The Romanian government has closed 520 of 650 mines operating in 1997 and physically erased or converted 120 of those sites. The crumbling of Romania’s once huge mining sector posed an enormous challenge in the late 1990s as the number of mining employees nationwide was halved. In 1999 the government turned to the World Bank for assistance in creating alternative jobs for ex-miners. After a slow start, their joint efforts to transform the mining communities are starting to pay off.

Romania can no longer afford to subsidize its mines

In the days of Nicolae Ceaucescu’s mad-cap rush towards energy self-sufficiency, the average salary of a miner was twice that of an ordinary worker. Miners were showered with benefits and treated with kid gloves ever since a 1977 strike forced the communist dictator to accede to their demands. Around 300,000 people worked for the mining industry in 1989. The tables turned on them in the late 1990s when Romania realized it could no longer afford to subsidize inefficient, polluting mines. The mines drained the budget in a country that, even without coal, had an energy surplus. In 2004 the government agreed with the European Union to end all subsidies to the mining sector by the end of the decade.

Restructuring began in earnest in 1997, with no plan for the decommissioned miners beyond lump payments. By 1999, ex-miners had spent their severance money and were still overwhelmingly jobless. Working with World Bank economists, the Romanian government started drafting a strategy to rehabilitate mining regions hit by massive layoffs. (The Bank also provided expertise on sealing mines in an environmentally sustainable manner). A special agency for the development of the mining regions was put in charge of stimulating growth by pumping resources into new businesses and jobs.

Helping mining regions hit by massive layoffs

More than 19,000 jobs have been created or sustained thanks to employment incentives, professional training, business support and micro-credit schemes introduced and gradually improved by the national agency over the last four years. A second $120 million loan from the World Bank seeks to increase the scale of this first endeavor.

The mining area of Campulung, in the lush foothills of the Transylvanian Alps, needs all the help it can get. In the past decade, 9 of 12 local mines have been shut. Those mines provided jobs for 2,700 workers in 1997 but employ fewer than 600 people today. At the same time, Aro, the maker of all-terrain vehicles and the only other big employer in the area, is on the brink of extinction. To feed their families, workers have gone back to subsistence farming on small family plots (which remained privately-owned in this region even under communism). Others try their hand at construction work in Italy or strawberry-picking in Spain.

First signs of hope

Against this stark background, the first signs of hope are appearing. Since last fall, when government support became more widely available in Campulung, the jobless have more options.

When Liviu Radu, 25, left the mine where he had spent two years extracting lignite coal 200 meters below ground, he seemed ill-suited for any other type of work. Mining was all he knew. His family and his entire village lived off the neighboring mine, an underground pit called Poienari (“Meadows”) which closed its doors on June 1st 2005 after years of decline. Against the odds, one year after being laid off, Radu is now learning carpentry in a small furniture workshop which his cousins Bogdan and Aliu Popescu created in 2003.

When the Popescu brothers heard about the job subsidies offered by the National Agency for the Development of Mining Regions, they immediately thought of Radu. They moved their workshop to a four-story business center, set up by the same agency last September, where the rent is free for start-ups. Radu now spends his days there gluing particle board and sanding rough edges. “I like it much better than mining,” he says. “The old job hurt my bones. Now I get to see the sun.” The agency pays $1,000 towards his salary for a year. The Popescus have vowed to keep Radu employed even after the subsidies expire.

At the other end of town, a young entrepreneur recovering from the loss of his dealership in Aro auto parts, has used the same employment scheme to create 50 jobs at a cutting-edge factory that churns out metal structures and containers. Gabriel Sendroiu opened his growing business only two years ago and welcomes the financial help. “We’re good for a year thanks to World Bank support. That’s the amount of time you need to train staff and enter the market,” he says.

Most of the new hires at the busy factory are former Aro workers. Sendroiu did give a job to Viorel Malaisi, a former locksmith at a local mine that is slated to be closed. But Malaisi, 41, knows he’s a fortunate exception: “Most of the miners are unskilled. They perform physical labor with obsolete technology. Even a mining engineer has a hard time adapting,” he says.

"Something must replace the death of mono-industries."

Drawing lessons from its first stab at job creation, the National Agency for the Development of Mining Regions has shifted its focus from helping individual miners to targeting whole mining communities. It seeks to foster a new business culture that will pull people away from odd jobs and bare survival.

The mayor of Campulung and local businessmen are pinning their hopes on tourism. They recently drafted a project for the renovation of the town’s historic center with European Union funds and are discussing the creation of a spa resort. The area has potential: a monastery, pretty streets and verdant hills where horsemen canter and shepherds mind their flocks. With World Bank assistance, the mines are even being returned one by one to something close to nature.

“Something has to replace the death of mono-industries,” says Emil Popa, the manager of the local business center where Radu now makes furniture. “Campulung was once a busy craftsmen’s town, the capital of Southern Romania,” he notes. “A renovated town center could attract tourists and remind people of what they used to be.”

This progress was made possible thanks to the World Bank's Mine Closure and Social Mitigation Project (1999-2006).

Initially published in August 2005