The ongoing strikes in Tunisia’s phosphate mines offer a valuable insight into structural deficits of the Tunisian economy. Since 20 January 2018, workers and unemployed youth have been blocking the entrances to several phosphate mines in Ghafsa, Tunisia’s mining region, effectively halting phosphate production.
Tunisia’s mining sector
Tunisia has significant deposits of iron, zinc, clay and phosphate. Phosphate mining began in 1996. By 2010, before the overthrow of former president Zine El Abidine Ben Ali, Tunisia was producing 8 million tonnes annually, making it the fifth largest phosphate products exporter in the world.
The Tunisian state encourages private investments in its mining sector – private investors receive a four-year, annually declining tax break, for instance – but ownership of the mines themselves is limited to government entities. The Compagnie de phosphate de Gafsa (CPG), a state-controlled mining conglomerate, controls phosphate production.
After the Jasmine revolution in 2011, mining output fell drastically by over 50%, reaching a historical low of 3.5 million tonnes in 2017. The negative trend continued, hitting rock bottom in January 2018 with an output of 160,000 tonnes compared to 500,000 in January 2017.
Nonetheless, phosphate production still accounted for 2% of Tunisia’s GDP in 2017, remained a primary source of foreign exchange and employed about 27,000 people.
Social turmoil
The recent losses have been caused by mass strikes. Miners are paid salaries as low as 300 TND per month and work under dangerous and often inhumane conditions, where accidents are common. They also suffer from the pollution caused by phosphate production, such as groundwater contamination.
Meanwhile Gafsa, together with the adjacent region Sidi Bouzaid, are among Tunisia’s poorest areas. Unemployment is around 30%, double the national average, and is even higher among young university graduates, whom the local economy is unable to absorb. In fact, it was in Sidi Bouzaid province that the desperate street vendor Mohamed Bouazizi set himself on fire on 17 December 2010, triggering the Arab Spring.
To appease the local youth, Tunisia’s transitional government hired thousands of unemployed people, continuing Ben Ali’s system of buying loyalty through recruitment in the public sector. The new government decided to ‘greenwash’ this scheme and created so-called “environment companies” that hired hundreds of unemployed youths without actually providing work. The CPG hired approximately 8,000 new employees, although its profits have been declining in the last seven years. As of February 2018, there were 13,500 employees in the CPG who received a salary without work.
A further problem is the CPG’s hiring process and the subsequent reactions of the local population. Every time the results of a hiring rounds are published, protests break out over the lack of transparency in the recruitment process and corrupt hiring practices. The latest round of strikes that commenced on 20 January was triggered by the publication of recruitment results.
Between a rock and a hard place
The struggling phosphate mining industry is emblematic of the country’s endemic structural problems. Around 15% of the population live under the poverty line, and the recent price increases and tax hikes owing to the 2018 Financial Law only exacerbated the situation. On the other side, companies are subject to a tax burden of up to 35% and an opaque and often corrupt bureaucracy.
Furthermore, Tunisia is strongly divided. While the coastal regions around Tunis, Ariana, Sousse and even Sfax have managed to attract manufacturing sites, high-profile tourism and even sophisticated service companies working with international clients, the hinterlands in the South and the West are plagued by stubbornly high unemployment, social problems and a lack of foreign investors. The resulting social turmoil scares off investors, creating a vicious circle of strikes, unproductivity, lack of funds and a further decline in output.
The Tunisian government is stuck between a rock and a hard place. It has to keep the social peace in the country and simultaneously keep international lenders happy – such as the IMF, which in exchange for a $2.9bn loan demanded austerity reforms, wage freezes and hiring cuts in the public sector. Tunisia’s powerful umbrella union UGTT (Union Générale Tunisienne du Travail) rejected these reforms and threatened a public sector strike. With more than 900,000 members, the union is represented in virtually every sector of the economy. Yet there are indicators that the UGTT does not want to engage in destabilising action: it condemned the ongoing miners’ strikes and the protests that broke out in Tunisia following the new Financial Law.
Wait and see
If the government cracked down on the protests, this course of action could spark civil disobedience all over the country. On the other hand, if the government gave in to the miners’ demands, it would only cause more protests as it would essentially show that the government can be blackmailed. Both situations would be a political nightmare for the ruling parties. However, the government’s current policy of attentisme (wait and see) will only exacerbate the problem and lead to a further decline in phosphate production and accelerate the depreciation of the Tunisian Dinar.
It is likely that President Beji Caid Essebsi will tighten his grip on the mining region after the municipality elections in May 2018. There is a realistic possibility that the government will bring back order by force after these elections. In May 2017, President Essebsi announced that he will not tolerate any more blockades at economic hubs and in November 2017 phosphate production sites were declared a military area, allowing the military to protect the production and act against disturbances through the use of force. This would reverse the trend of declining phosphate production or at least slow it down, however it would also be extremely unpopular as many Tunisians sympathise with the miners’ struggle. It is likely that the government will only make minor concessions until May in order to try to keep the status quo, before changing its course of action once elections are over and the production has reached dangerously low levels.
