By John Helmer in Moscow
More than one worker in ten in the Russian mining and metals sector is currently out of work, or facing company-ordered reductions of work time or pay, or both.
The statistics are being gathered by the Russian Mining and Metallurgical Trade Union, which has been monitoring job and pay conditions at 240 enterprises in the sector since last October. At that time, a total of 752,409 workers were on the employment rolls. A union source said their data have been compiled up to the end of February. At this point, the union says that 14,039 have been dismissed; 66,747 have had their working hours reduced, but retain their jobs; 1,384 are on enforced furlough without pay; and 1,247 are on furlough with partial pay. In total, 83,417 production and support workers at Russia’s mines, mills and metal works have now been hit by the economic crisis; about 11%.
The union also charges that many of the layoffs and pay cuts have been made illegally. An estimated 5,430 of those on the dismissal list, 42%, purportedly agreed to severance, but there is ample anecdotal evidence that they were forced by company managers into signing resignation papers. The union also charges that 35 companies in the sector are paying wages to 11,598 employees at a two-thirds reduced level that is not allowed under Russian labour regulations.
Layoffs of between 2,000 and 4,000 workers on the payrolls of Evraz (EVR:RU) steelmills and mines in Russia are a violation of the agreement Evraz signed with worker and regional representatives in November, a union leader told Minesite.
Lyudmila Zavzyalova, secretary of the Nizhny Tagil municipal authority, in Sverdlovsk region, told Minesite that 1,400 workers from Evraz’s lead Russian mill at Nizhny Tagil were recently listed for dismissal, and 582 workers from the nearby Vysokogorsky iron ore mine.
Alexander Mironov, a spokesman for the Kemerovo region branch of the Mining and Metallurgical Trade Union told Minesite the numbers to be laid off at Evraz’s plants and mines in his region were revealed in a company document, dated December 30. According to Mironov, the shutdown of two blast furnaces and two coke batteries at the West Siberian Metallurgical Combine (Zapsib) and Novokuznetsk Iron & Steel Works, both in Novokuznetsk city, will cost 700 and 150 jobs, respectively. Another 900 workers were targeted, according to the union official, at mines of the Evrazruda (“Evraz ore”) subsidiary.
Combining worker layoffs in the two regions makes a total of 3,732. The official payroll of the Evraz group, which is controlled by Roman Abramovich and Alexander Abramov, is not cited in the last company annual report, nor in any of the company’s references to its operations on the official website;. except for a note that 90% of the Evraz group workforce is employed in Russia; 10% in the rest of the world. According to the company’s 2007 Annual Report, labour accounts for 10% of the costs of the Russian steel division.
Layoffs ordered by Evraz at its North American plants since last November include 130 at the Oregon Steel Spiral Pipe Mill — 13% of the Portland firm’s work force; and 400 at Canadian plants of the IPSCO pipemaking group, which Evraz took over last year.
Mironov said the order for the layoffs violates an agreement the company signed with the union on November 6, 2008, when it was agreed that workers would accept a wage cut in exchange for retaining their jobs. The union also understook not to seek to revise the terms of the current collective labour agreement, and not to strike or hold other protest actions.
The union has asked the senior management of the company, along with the governor of the Kemerovo region, Aman Tuleyev, to reconsider the position, and to renegotiate the job and pay policy. Evraz spokesman in Russia, Tatiana Drachuk, claims the Russian numbers are not final, but she refuses to say what the Evraz payroll was last October, and what it is now. In Oregon, plant officials were ordered by the company not to speak to the media, because Evraz PR agents claim Oregon reporters are biased against the company.
A rolling-mill and associated production facilities have also been halted last month at Vitkovice, Evraz’s steelmill in the Czech Republic. This is despite an announcement from a mill spokesman in December: “We are not going to decrease production. We might have to concentrate more on our Russian branch and deal with possible problems in loans we will help to finance.”
A different approach to layoffs has been adopted by Magnitogorsk Metallurgical Combine (MMK:LI, MAGN:RU), which is controlled by Victor Rashnikov, and is Russia’s largest steelmill. Unlike the other steelmaking majors, MMK lacks its own iron-ore and coal mines, although it is developing both for the future, and has an equity stake in Belon, one of the top-5 coking coal miners in the country.
At MMK, according to the union, the company has been applying pressure on workers to sign resignations as a way of cutting the employment rolls without appearing to fire anyone. According to a Moscow press report, which interviewed several MMK workers, they were promised severance packages if they agreed to resign, and threatened with sanctions if they did not. The head of MMK’s union refused to answer questions about the process.
A source at the Mining and Metallurgical Union said it had compiled found evidence of “increased cases of voluntary termination of workers at all enterprises reflecting fraud and pressure from the employers.” Russian labour law requires two months’ advance notice in writing for proposed layoffs, and an offer of alternative work with the same plant. Dismissal requires severance pay amounting to two months.
The union also charges MMK with cutting wages to workers remaining on the payroll by 12% between October and December. As of January 1, the union says that MMK had also delayed paying wages to itsd workers of Rb117 million ($3.3 million).
Last October, Alexander Mastruev, head of personnel at MMK, was reported as claiming that MMK wasconsidering a furlough of employees, not dismissals or job cuts. The company spokesman Yelena Azovtseva declines to answer questions on the alleged labor law violations, to comment on the union reports, or to give payroll numbers. Several employees of MMK’s press office have lost their jobs recently.
Belon (BLNG:RU) was the target of public criticism by the Kemerovo region governor Aman Tuleyev for delaying payments to miners, as well as to sub-contractors maintaining shafts and mine equipment. The company was given a deadline of the end of this month to make good on its arrears, or face prosecution by the local authorities.
At Mechel (MTL:US), a leading coal miner in the Russian fareast, there have been no firings, according to company spokesman Ilya Zhitomirsky. “What we have done to have optimized work time and positions. Some work on shorter shifts, or fewer work days. We do not hire new workers, and as there was always a certain turnover rate, we take adevantage by not replacing workers to optimize on the number of personnel. Some have taken retirement. Some are being replaced by transfers within the Mechel group.”
Norilsk Nickel (MNOD:LI, GMKN:RU) is Russia’s largest mining company, and a world leader in mining of nickel, copper, platinum group metals, gold, and cobalt. With nickel below the $10,000 per tonne mark, Norilsk Nickel is one of the very producers in the world to be operating profitably, though this is because of the value of by-products, especially precious metals. The management says there is a policy of no layoffs of production workers in Russia. Last year, a company source said there were 220 layoffs of administrative personnel at the Moscow headquarters. Outside Russia, Norilsk Nickel has halted operations at its nickel mines in Australia and South Africa (the former Lion Ore), and may sell out.
The Metalloinvest group (unlisted) of Alisher Usmanov, which owns two of Russia’s largest iron-ore mines, Mikhailovsky and Lebedinsky, told Minesite there have been no layoffs since the cricis began last year. A source at the company’s press service said that “when there has been a reduction of capacity and output at the mines and mills, the workday was optimized and the amount of holidays was increased. When the capacity was reloaded, employment returned to the norm.”
In the goldmining sector, Polymetal (PMTL:LI) claims it has ordered no layoffs. Polyus (PLZL:LI), the sector leader owned by Mikhail Prokhorov, refuses to answer questions about its employment policy. Highland Gold (HGM:LN), owned by Roman Abramovich, also refused to answer questions.
Alrosa, the diamond miner, has not fired workers. A source added that as a wholy state-owned company, it cannot lay off people. It is negotiating with the state stockpile agency Gokhran to buy diamonds, and thereby keep the mines in close to full operation.