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Gazprom Begins Personnel Cuts
Gazprom CEO Alexey Miller has signed an order that the personnel in the head office be cut by 10 percent beginning January 1 of next year. That means the elimination of more than 500 of the company’s highest-paying positions. The move comes after a sharp increase in management expenses in 2007, although analysts doubt the monopoly will save much money this way. Sources say branch offices will also be affected and some divisions may cut up to 20 percent of their employees. Since the monopoly’s shareholders meeting on June 27, it has lost 8.7 percent of its capitalization, which is now $316.7 billion.
According to Gazprom’s 2007 annual report with international accounting standards, expenses for wages rose 24.7 percent to 248.9 billion rubles in connection with “rising average wages and other payments to workers.” The number of employees at Gazprom rose 3800 in 2007 to 436,000. Of them, 9.3 percent are managers, 22.2 percent are specialists and 63.1 percent are workers. The biggest cost increase, 32.6 percent to 23.7 billion rubles, occurred in the head office. There, 6.4 billion rubles was spent on salaries, which is 22.2 percent more than in 2006. The number of employees there increased by only 90, however. “Since Gazprom cannot lower the cost of energy or other unregulated expenses, it is trying to regulate the balance between net profit and the number of employees,” commented Valery Nesterov of Troika Dialog.
Nesterov says that the personnel cuts are a good sign for investors, since “the monopoly’s staff is very inflated and the upcoming cuts will be a stimulus for managers to work with great efficiency.” Others say that the move is too insignificant to have a real impact. This is the first systematic staff cut since Miller took over in 2000. Oil and gas companies worldwide are cutting personnel, although no other Russian companies have announced any cuts.
www.kommersant.com
All the Article in Russian as of July 18, 2008
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