A rally of Surgutneftegaz trade unions against low job wages
Photo: Aleksandr Onopa
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Ties of Oil Alone
// The management and workers of Surgutneftegaz: can't live with each other, can't live without each other
The Surgutneftegaz company has begun an internal reform. Wage increases, adjustments in the proportion of salaries to bonuses and new hiring practices have been announced. These measures are in answer to a social protest this summer that was unprecedented in that sector. Kommersant correspondent traveled to Surgut, where he came to the conclusion that, given the company's conservative economic model, the changes will have only a cosmetic effect.
The Rebel Crane Operator
A dozen or so people were noticed at the traditional May Day celebration in Surgut carrying signs with messages such as “Wages like at Gazprom.” A month later, employees at Lyantorneft, a subsidiary of Surgutneftegaz about 150 km. away from it, held a mass meeting. Finally, several thousand people met on the main square of Surgut on July 16. That meeting was organized by activists from a new union headed by Alexey Zakharkin, a crane operator for Surgutneftegaz technical transport unit No. 2.
“If you're a slave and you get some sad pleasure from self-loathing, this leaflet is not for you,” Zakharkin told his associates before that meeting. The demonstrators demanded higher wages, more benefits and compensation and “raising the culture of communication” from the management. Zakharkin has already filed documents to register the new union with the Khanty-Mansi Autonomous Area and is negotiating with Association of Labor Unions of Russia.
Association of Labor Unions of Russia leader Sergey Khramov is optimistic and promises make the new union the equal to the initial union at Surgutneftegaz. With their new status, the union activists can count on legal and financial support from SOTSPROF if they are fired.
The July 16 meeting was the apex of the protest movement at Surgutneftegaz and by the beginning of August, the union was looking for more activists. Zakharkin and his two assistants said that the union now has 20 active and 500 “passive” members who will join the organization if it is successful. Those are not a huge numbers in a company with almost 90,000 workers.
Many of the workers at the mass meeting were attracted by curiosity and were disappointed to find out that the new union would not concern itself with vacation package tours, considered the traditional function of a union, but with the defense of abstract rights. The signatures of 692 employees at Surgutneftegaz technical transport unit No. 2 appear on a letter critical of Zakharkin that appeared in the corporate newsletter. Drivers from that division that the Kommersant correspondent talked to expressed full loyalty “We've all been here for 20 or 30 years and because of one self-appointed crusader, they have all been labeled rebels,” one said.
Zakharkin assumes that people will begin to trust him after legal actions are taken to defend workers' rights. He has been at Surgutneftegaz for four years. Before that, he changed jobs frequently. Surgutneftegaz technical transport unit No. 2 head Robert Galeev described him as reliable and capable. “I don't know what kind of bee he got in his bonnet,” he commented. Surgutneftegaz personnel chief Dmitry Popov noted that the very fact that Zakharkin was hired with that work history is indicative of personnel problems in the division, where labor fluctuation is 17 percent.
Carrot and stick
The outbreak of protest obviously took the management by surprise, but it nonetheless reacted promptly, using the tried-and-true carrot-and-stick approach. Surgutneftegaz general director Vladimir Bogdanov went to Lyantor and admitted that problems do exist and promised to solve them. They are now awaiting the dismissal of repressive bosses there. Company representatives say that the decision to raise wages by 20 percent in October had been made before the mass meeting. They are also promising to change the ratio of wage to bonus to a softer 40 percent to 60 percent by the end of the year. A new three-year collective contract will be approved in November that will be much more financially onerous for the company.
The remaining demands made at the July 16 meeting are either impossible or absurd, according to Surgutneftegaz deputy general director for finance Andrey Atepaev. Supervisors have become threatening to union sympathizers and the slightest malfeasances of union activists are noted. “They are now subject to special attention, Popov acknowledged, “within the limits of the law.” Two of them have been fired, one for drinking alcohol with girls on the jobsite and the other for repeated violations of safety rules. Zakharkin's assistants refuse to divulge their last names and strenuously avoid local television exposure. The standing of the personnel department has been raised. The new personnel policy severely limits job changes within the company and a probation period has been instituted for all employees.
Bogdanov and all of his managers have accused the local communist party of instigating the unrest and chairman of party's city committee Gennady Khotmirov is worried that their negative attitude toward it is serious. The independent union applied to the city committee for assistance and was provided with premises, help writing its charter and publicizing its meetings.
Conservatives
Discipline and effectiveness reign in Surgutneftegaz, the Soviet ideal put into practice. There is a rule on everything, down to employees' bootlaces. There is cleanliness and order everywhere. The corporate security service, organized in 2002 by former policemen, fights stealing and disorder. The nearly military discipline and corporate spirit (“The first toast is to Bogdanov”) and the good benefits (“We have stability!”) made Surgutneftegaz the leader in production growth and capitalization growth. It has accumulated $11 billion in free funds.
“They give fines for having a rug out of place or throwing down a cigarette butt,” a disgruntled fitter said. “And tell you that, if you don't like it, you can quit.” Managers explain that they do not impose fines, they reduce bonuses. That is the practice throughout the oil industry. Salaries consist of a wage and a bonus component, the latter of which can be paid partially or not paid at all. Surgutneftegaz has the most extreme ratio of wage to bonus, 30 percent to 70 percent, which says a lot about the repressive outlook of the management. According to statistics supplied to Kommersant by the company, 8-11 percent of employees are subjected to fines, which average a third of the employee's salary. In Soviet times, the ratio of wage to bonus was 40 percent to 60 percent. At LUKOIL today, it is 50 percent to 50 percent. Atepaev explained the need for the large differential at Surgutneftegaz. “We started at Talakan, for instance,” he said, referring to oil field in Yakutia notorious for its difficult working conditions, “and the customs people at Lenaneftegaz tell me, We can't do a thing with our people, but yours work like the devil.'”
Surgutneftegaz managers have complete financial accountability and have constructed a complex system of indicators and competitions between production divisions. The company's board of directors is somewhat reminiscent of the Soviet Politburo in the average age of the members and their standard biographies.
Surgutneftegaz is owned by its subsidiaries in a complex property structure. It does not use international accounting standards and has a bloated staff. Analysts note that the management is conservative, it invests heavily in exploratory drilling and, unlike YUKOS or Sibneft, it did not blast through layers bearing oil for future generations. It does not make a lot of money for its minority shareholders. Bogdanov practically runs the company personally, and his dividend policy was so conservative that dividends were raised to a significant level only last year, under shareholder pressure. The workers were indignant. They have no money for salaries but they do for dividends.
Wages and Credits
According to accounts, the average salary in the company last year was 36,000 rubles. In the first half of this year, it was 30,000 rubles. With the yearend bonus, the average salary will grow by 12-13 percent over last year's. On average, they say, Surgutneftegaz employees receive salaries on level with LUKOIL and higher than in other Russian oil companies. But ordinary Surgut residents who work for the company complain of the low wages, harsh discipline and arbitrariness of supervisors. Employee turnover is growing along with the dissatisfaction. There was a time when a job at Surgutneftegaz could only be gotten through personal connections or bribery. Now there are vacancies in many divisions.
Many people have noted that salaries have not risen, but fallen, while repression, as they perceive it, has risen. A fourth-class fitter made as much in 2001 as a fifth-class fitter makes today, Zakharkin's assistant Alexander says. If that is the rule rather than the exception, he continues, it indicates that salary growth has taken place mainly in the more competitive markets for managers and engineers. Labor is cheap, but specialists enjoy great demand. Some make $3000 per month and are still hired away. Now they are dreaming of a Surgut Gazprom, with high salaries and excellent benefits. But Gazprom has many less employees and many more of them are highly-paid engineers.
Engineers make up only 20 percent of personnel of Surgutneftegaz. The company is strongly opposed to outsourcing and has had a closed production cycle since Soviet times, with its own furniture factory. The 12,000 employees of the company who receive less than 20,000 rubles per month are a problem for the company, Atepaev admits. It can assumed then that the salaries of about half of Surgutneftegaz's employees, mainly those in auxiliary divisions, are less than the city's average, which has risen to 26,000 rubles per month thanks to business and state employees. Ordinary Surgutneftegaz employees compare the growth in their salaries to the growth of oil prices and the growth of utilities prices, which have increased by 160 percent in Surgut in the last three years. The cost of housing is also skyrocketing. There is a problem with bank loans. The management's fine policy comes into conflict life goals, since receipt of loans requires exact information on future income.
Consumer credit has taken Surgutneftegaz by storm – apartments, cars, clothes, furniture – and it has already made it impossible for many people to make ends meet. Surgutneftegaz technical transport unit No. 2 head Galeev says that he is exhausted from filling out income verifications. “Look at all the foreign cars,” Popov adds, “and they are already writing to me from Sberbank saying that our employees aren't paying and are image is suffering. But what can you do?” In Lyantor, where the protests began, 300 employees are unable to repay their loans from Surgutneftegaz, which builds housing and sells it to its employees at cost with a 30-percent down payment and a five-year interest-free loan.
Thus criticism of the company is increasing and the company's image is being spoiled. Managers are suspected of nepotism and corruption. The new wing being added to the central office is being called “the kindergarten” because that is where the children of bosses' children will work. Whether or not that is true, Surgutneftegaz is experiencing a crisis in confidence. An employee in Surgutneftegaz technical transport unit No. 2 said that her supervisor had slighted her. But she did not trust the management, union, labor mediation commission or telephone hotline and does not want to use the anonymous box for complaints. Surgutneftegaz's political influence is declining along with its image and spirit. Surgutneftegaz controlled the Surgut city council until last year's elections. now it cannot even block decisions.
Dead-End Vertical
The company is keeping things under control so far. There are unlikely to be any more meetings in the near future and union rebel Zakharkin is likely to be overcome. But Surgutneftegaz has no room for maneuvering. The increase in salaries will lead to increased social tension in the region and a spike in local inflation. Accounting reforms could be painful for the company without being effective. They are not planned. Rumormongers talk about the ill effects of coming reforms and the management vehemently denies it. Relations with the subsidiaries probably cannot be improved either because of lack of feedback and because it would effect the speed of developing deposits. The company has allowed its supervisors have no other ways to exert their influence than imposing fines and yelling.
The vertical of management in the company has not been disrupted, but its logic contradicts life's realities. The economic model imposed by Bogdanov is an improved version of the Soviet Union that cannot adapt to Russian capitalism, competition on the labor market and booming consumption.
Mikhail Fishman
All the Article in Russian as of Aug. 14, 2006
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