No. 2, 2009


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

Today, competitive benefits of modern companies involve the growing impact of constructive processes in the social sphere and effective participation of trade unions in these processes. For 15 years, the International Association of Trade Union Organizations of LUKOIL has been efficiently implementing social partnership principles in all divisions of the Company under the slogan, "LUKOIL is a united family."

Q: Unfortunately, the world financial and economic crisis hit every economic entity without exception. How did LUKOIL as a whole and its trade union association in particular respond to this global threat?

A: To put it short, there was no panic or undue hustle, in a word; it was a businesslike response, based on the survival lessons learned in hard times before and even during the default period. To be sure the Company has to reduce operation costs, and limit its investment program. It is a matter of principle to us that in this situation LUKOIL is not planning any personnel reduction and pay cuts or repudiation of social obligations assumed earlier.

Moreover, according to Company President Vagit Alekperov, during the crisis, the main objective of personnel management consists in retaining the existing workforce, attracting new up-and-coming workers, and shaping an approach to the workforce as a strategic resource. Most interestingly, a new generation of specialists will be trained to provide for effective activities in the future, with the economy on the rise. Also worthy of note are projects that involve job creation. For instance, the future development of offshore fields in the Northern Caspian would require over 7,000 new employees.

It is important to the International Association of Trade Union Organizations (IATUO) of LUKOIL that the Company management reckons on its support in providing for sustainable operations during the crisis and social stability in its divisions and areas of its operation. The LUKOIL President spoke of these expectations at the recently held 5th IATUO regular conference. The conference focused on working out trade union actions to overcome difficulties with due regard to the Company's anticrisis program.

Q: Recently, despite the global financial and economic crisis, it has been suggested that companies' reputation, image and eventually competitiveness in the international market are not only conditioned by their economic efficiency and capitalization but also by corporate social responsibility and observance of current social standards. How would you comment on that?

A: Yes, LUKOIL has been taking account of these "conditions", gradually accepted in Russia, from the very beginning. Their role is reflected in its experience of operating not just in Russia but also in more than 40 other countries.

Q: In this connection a question arises: does the social responsibility of the employer and the Company management as well as their apparent loyalty toward the personnel come as a concession to the trade union association or as a deliberate and conscious position?

A: No relationships can be based on mutual concessions alone, the more so in the field of long-term social partnership. A search for mutually beneficial solutions and for ways of sustainable socio-economic development in general seems far more reliable, and this, in turn, is determined not only by the economic but also social strength of a company.

Q: Then, what the Social Partnership Agreement is in actual fact: is it a temporary concession on the part of the employer in the face of trade union demands or a mutually advantageous document contributing to the common cause?

A: Beyond all doubt, it is mutually beneficial cooperation between the parties. Furthermore, this is demonstrated by the viability of the Agreement as a social partnership instrument.

Notably, the activities of the Company and the trade union association itself within the framework of global cooperation have both social and economic effects. For, as the LUKOIL management believes, the funds allocated to social projects are invested in the Company's future. This approach is based on explicit criteria of corporate social policy effectiveness. These are, above all, factors such as labor productivity growth and focus on quality of life improvement in the areas of LUKOIL operation. Hence, the trust to the Company's brand and products.

Q: The current crisis is international in nature. Interest in the experience of a trade union association acting within the LUKOIL transnational company has grown accordingly, hasn't it? How would you describe the IATUO's organizational capacity?

A: The efforts made by our trade union association over the recent five years have been appreciated internationally. According to foreign experts, a broad approach to trade union activities and to social partnership within the Company helped to develop an optimal model of relationships between the employer and the trade union association during the transition period.

Apparently, the secret of success lies in commitment to a goal set. Indicative in this connection is the IATUO Strategy in Conditions of Globalization for 2004-2008 we adopted at the time. The document was subject to prior approval both in terms of practice, by trade union organizations, and expert assessment by the academic circles. Today, I am proud to say that the key objectives of this strategy have been achieved, and ahead of time at that. It's time we set new targets! We believe that, as before, our future tasks should take into account specific conditions and combine the global activities of the IATUO in the transnational company with the individual approach to an employee, which is a traditional unionist approach.

The leading body of the trade union association, the IATUO Council, has always essentially relied on the grassroots units. It is on the ground that the inseparable unity and interdependence of job-related and social interests of employees are manifested most visibly and tangibly.

During the global financial and economic crisis with its peak still ahead, both the responsibility of the grassroots units and of the Council become especially important. For instance, new forms of interaction between the employer and the trade union association of LUKOIL may be needed, as it happened during the 1998 default. At that time, the adverse effect of the crisis on the Company was minimized by common efforts. Central to these efforts was the commitment of the parties to avoid confrontation and to formulate a common vision of ways to production development and employee welfare.

Q: The level of social partnership at the shopfloor is usually measured by the scope of obligations under labor contracts and agreements between the employer and the trade union. What are the specific features of these documents in LUKOIL that, in your opinion, those willing to follow your example should consider?

A: Indeed, social partnership in LUKOIL has a broader basis. The parties stand firmly on a triple legal basis: the Social Code, the Employer-IATUO Agreement, and the labor contracts. This system also involves feedback, for instance, through annual conferences of employees. These are attended by top managers of the Company, its subsidiaries and IATUO Council of LUKOIL. Open discussion of urgent issues and collective assessment of the progress achieved are the driving force of further advance contributing to corporate capacity-building. In this way, conscious social responsibility is manifested at all levels of operations and management and in all spheres of corporate life.

In drafting every new agreement between the employer and the trade union association the LUKOIL Bilateral Commission for Regulation of Social and Labor Relations always takes into account proposals put forth by both the IATUO Council and individual grassroots units, i.e. coming directly from the employees and employee groups.

Q: The IATUO watchers are familiar with the union-employer interaction principles which add both stability and dynamics to social partnership. What is it all about?

A: Speaking of the Agreement between the Employer and the Trade Union Association, one should note that it is not limited to mutual interests of the employer and the employees, but provides for the evolution of civil society and sustainable and effective growth. Today, the IATUO and grassroot units (jointly with the management of subsidiaries) focus on strengthening local self-government within the framework of national reform, on collaboration with the authorities and residents of the areas where the Company's divisions are located. Thus, the issues of employment and decent working and living conditions go beyond the scope of an individual company and become common concerns of the municipality and the region.

Of no less importance is the parties' compliance with the already accepted principles of conduct and interaction. The result is as follows. First, every new agreement is of a higher level than the previous one. This finds expression, in particular, in a greater number of the employer's obligations. For instance, whereas the 2000-2002 Agreement contained slightly over one hundred such obligations, there were more than two hundred in the 2003-2005 document.

Second, each new agreement includes standards that are above the level of social security prescribed by effective Russian law. Moreover, no provision once accepted is fixed, and there is room for changes to improve the obligations. For this purpose, the actual situation is continuously monitored. The document is updated based on new legal provisions and the financial situation in the country and in the Company.

The Company's social partnership policy also takes into account a new trend: transition from the inertial to the innovative economy model. The IATUO promotes employee motivation to work and socioeconomic security. We regard the guidelines presented by Mikhail Shmakov, Chairman of the Russian Federation of Independent Trade Unions, at the trade union convention as a matter of principle. These include, for instance, the shift of emphasis from prime concern for the social security of employees to the cultivation of their economic responsibility, raising work efficiency and productivity. The benchmark in LUKOIL is represented by the winners in the corporate "Best in Trade" contest among workers.

The socioeconomic process in the Company is driven by both partners. In particular, the shared funding of social programs (occupational pension schemes and voluntary health insurance) involves both the employee and the employer. Furthermore, where certain measures are required to ensure appropriate labor safety, these are implemented jointly and with active participation of voluntary inspectors authorized by trade unions, which number over 3,000.

Q: How would you describe the IATUO capacity for further development and the scope of its plans?

A: Our international association should solve its tasks within the framework of both the LUKOIL transnational company and national and the international trade union movement. One of the most visible landmarks in our development is the IATUO's integration into the European social environment on the basis of the Global Agreement on cooperation between LUKOIL and international trade unions.

The above-the-ordinary potential of the IATUO is fulfilled through projects, such as regular holding of major international forums in Russia and abroad in cooperation with the Company management. Knowledge and experience acquired at international theoretical and practical conferences and round tables are extensively applied in the activities of LUKOIL Group divisions and used in drafting new guidelines for further advance.

It must be admitted that at the new stage of its work the trade union association, on the one hand, is faced with the challenges of the current period that are to be met, and on the other hand, more than enough relevant initiatives and proposals are put forward. No spontaneous, sporadic steps or random actions should be allowed. In the near future, we shall have all our plans and ideas arranged within a strict and streamlined system; it is with this target in view that the IATUO Action Concept for 2009-2013 is developed.

This document is being drafted in accordance with the LUKOIL Strategic Development Program with regard to anticrisis measures and actual situation. We are well aware that only perfect readiness to advance, in line with the corporate slogan "Always Moving Forward," will maintain and increase the demand for the activities of our grassroots units and the trade union association as a whole.

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Oil of Russia, No. 2, 2009
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