No. 1, 2005


Oil of Russia magazine talks to Georgy Kiradiyev, Chairman of the Council of the International Association of Trade Union Organizations of JSC LUKOIL

The prospects for building a social state in our country largely depend on harmonization of relations between the staff and employers, which constitutes

a continuous process of finding compromises, since their private interests differ greatly, after all. A good illustration of such a reasonable model for building relations is provided by JSC LUKOIL, where the responsibilities of the partners for the social welfare of the the staff and for business development are increasingly being equalized.

Q: The International Association of Trade Union Organizations of JSC LUKOIL (IATUO) is a structure of a new type, engendered by a market economy, and so far unique. Have the goals for which it was formed been attained? What are the scale and priorities of its current tasks?

A: The IATUO recently celebrated its tenth anniversary - just the right time to take a look back, appraise what has been achieved and reassess customary values. The main aim when the IATUO was set up was to consolidate the efforts of all the LUKOIL Group trade union organizations, each of which, having survived the economic depression in the early 1990s, still existed and operated independently. The process of joining together was quite logical, but it was not simple.

Judge for yourselves: permanent instability, a legal field in a state of flux, new labor relations that had not yet taken shape, let alone been registered legislatively. All this seems obvious today, but at that time dialogue between the staff and employers, to say nothing of constructive social partnership, seemed quite inaccessible and exotic. At that time, the creation of the IATUO, initiated by the trade union organizations themselves, was a serious step forward: the foundations were created for linking two principles - social responsibility and economic efficiency. The IATUO is now a complex, vertically integrated structure. It includes 364 primary and about 30 associations of trade union organizations of the Company's subsidiaries in 25 regions of the Russian Federation, as well as in Azerbaijan, Bulgaria, Romania, Moldova and Ukraine (almost 170 thousand members).

The priority task of our trade union association is to resolve pressing problems and protect the interest of the staff of LUKOIL subsidiaries in a dialogue with a single employer - the top-management of the Company. The past decade has confirmed this chosen course to be the correct one. Largely thanks to competent work by trade union activists, a normal moral and psychological climate is maintained within work teams, this being vital for work to be highly efficient.

We have managed to implement the principle of equal representation of the social partners on various social commissions set up to resolve socio-economic problems. This allows the trade union committees and the IATUO Council to react quickly to any complications arising in the situation and affecting the workers' position.

Q: LUKOIL's experience shows that it is, indeed, possible to establish constructive relations between employees and employers through effective social dialogue. What, in your opinion, is the secret of mutual interest and respect for partners?

A: Both the administration and the trade union association proceed from the principle of a continuous link between the economic and social components of life and the Company's business. Alongside effective management of production and marketing, the stable development of LUKOIL rests upon recognition of the role played by individuals. This is manifested in development of the social infrastructure, attention to the staff working and living conditions and active incentives to higher labor productivity.

The triple-level logical and legal foundations of the corporate social partnership are: the Company's Social Code, the Agreement between the employer and the IATUO and the collective agreements of subsidiaries.

It is common knowledge that a collective agreement is a code of socio-labor obligations of the parties to the partnership in a specific, detailed form. At one time, there was simply no other document more important than this in the sphere of social partnership. As the years went by, it became increasingly obvious that the collective agreement needed to be made on the level of a single employer.

After analyzing the collective agreements, we elaborated a framework document with average indicators and, on its basis, drew up a draft Agreement between the employer and IATUO, including all the most progressive ideas, significantly exceeding the norms guaranteed by law.

Each new Agreement, which remains in effect for a period of three years (the current, fourth one applies to the period of 2003-2005), traditionally not only extends the achievements of the previous one, but is also on a higher level of interaction between the partners and, most importantly, of the scale of the employers' obligations. It envisages, for instance, non-governmental pension provision, medical insurance of workers (the IATUO is the cofounder of relevant organizations) and a multitude of other social guarantees.

The Company's social code raises our socio-labor relations within the corporation to the level of responsibility toward the outside community: the territory where a subsidiary operates, the state and so on. This is a totally different scale.

Q: Why, do you think, oil-company employees are better protected today in social respects than the workers in other sectors of the economy of Russia?

A: I believe it is because of an ability to approach the solution of truly complex tasks correctly and persistently. I shall not speak about the industry as a whole, but restrict myself to the Company's experience.

For example, the problem of employment is one of the most difficult ones. The IATUO Council and the Company's top management carefully discharge their obligations, as secured in the Agreement, with respect to restructuring production. Above all, it is a matter of expanding the categories of employees who cannot be made redundant (including women with small children, disabled people who have suffered industrial injuries or diseases, single mothers, elected trade union employees who still perform their regular jobs, and so on), as well as preventing mass redundancies and the like. If the need arises for redundancies, the employer takes measures to ensure that alternative jobs are found for those affected. In the event of a lack of vacancies, people are sent for retraining, while retaining their average wage. We believe that nothing is trivial within the problem of ensuring employment.

Salaries are, we believe, the central issue of social partnership and the IATUO Council focuses particularly on this. This is reflected in the briefing materials sent out to the commission for socio-economic work, in the initiatives and proposals addressed to the Company's administration and the chairmen of the trade union organizations. We are perfectly aware that a rise in the efficiency of production should be accompanied by higher salaries for the staff. Here are some eloquent facts. The average monthly wage of the Company's staff had trebled by 2003 compared with 1999, while consumer prices had risen only 1.6 times. This trend has been maintained in 2004, too.

Issues of ensuring industrial safety, labor and environmental protection are always of priority significance for us. We believe that it is impossible to achieve tangible results without increasing the responsibility of middle management, engineers and the workers themselves and without developing social control. The elaboration and subsequent introduction of standards for analyzing industrial accidents and industrial diseases make it possible to disclose and eliminate danger factors as fast as possible. A corporate standard is being created for encouraging the staff members to abide by the rules of labor safety and protection.

Q: Alongside labor protection, people also need health protection. How are things going in this respect under the new conditions?

A: The formation of a corporate first aid system in the works is a vital component. Workshop first aid posts are fitted out with the latest equipment. Agreement has been reached that the Company will finance sanatoria and preventive medicine institutions for enterprises. We are maintaining the tradition of supplying employees with subsidized trips to health centers. The granting of additional vacations, regulation of overtime and work on weekends and holidays, payment for enforced downtime, social subsidies and compensations, organization of the employees' leisure time, professional instruction, training and retraining of the staff, additional obligations with respect to rotation employees - all these are important elements of social protection and are reflected in the collective agreements and the Agreement.

A major section of the Agreement is devoted to young employees and experts. Target programs adopted in subsidiaries envisage traineeships, help in adapting and in professional development, as well as cultural and sports events. Those who demonstrate talent and ability are provided with opportunities for career growth and it has become the tradition to involve them in R&D work. The LUKOIL Council of Young Scientists and Experts was recently set up to coordinate the activities of corresponding councils in subsidiaries.

A very important corporate social program is that for the development of non-governmental pension provision. Over 6,000 people have received supplementary pensions from LUKOIL and veterans can be appointed personal pensioners.

Such are the priorities in ensuring social protection of the staff. It would be a mistake to think that it is an easy matter to raise and resolve the multitude of social protection issues. Negotiations are held, sometimes extended ones, but it is important that we always manage to reach a consensus.

Q: LUKOIL's expansion abroad presupposes observance of international labor and social standards and necessitates corresponding strategic and tactical solutions. And these do, indeed, exist. Could you comment on them, please?

A: In 2004, something unprecedented in any of the former Soviet republics was achieved: a Global Agreement was signed on cooperation between LUKOIL and the International Federation of Chemical, Energy, Mining and General Employees' Unions and the Russian Trade Union of Oil, Gas and Construction Industry Employees (OGCTU). According to this document, LUKOIL, as a company conducting socially responsible, transparent business, assumes the obligation to abide by the universally accepted, international standards and conventions. It is also prepared to observe the national legislation and requirements presented on production units in each of the countries in which the Company's enterprises operate.

It is a question, for example, of protecting the human environment, flora and fauna, prohibiting the use of child labor, a proper attitude toward female labor and respect for human rights. In general, the adoption of such an act has a positive impact on the Company's image, thereby also indirectly increasing its competitiveness.

Thanks to the Agreement that has been signed, IATUO is being integrated into the international trade union movement as a full member and will obtain additional opportunities for strategic development. Second, the company LUKOIL does not just make promises; it assumes the obligation before the world community of pursuing a policy of socially responsible business.

We see what we have achieved so far as the starting point for implementing even greater tasks. We have tried to reflect these in the comprehensive new document - Strategies for the Activities of the OATUO. It is intended to form an environment for the worthy use and development of the working man's potential, relying, of course, on corporate experience, trade union solidarity within the country and on international links.

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Oil of Russia, No. 1, 2005
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