The government of Russia has adopted a program to reform the country’s metals indusry. Since 90 % of Russia’s metals producing works & plants are privatized, one might wonder why the State decided to interfere with the private sector.
But there is also another side to this problem. One worker employed in metals industry provides jobs for seven people in other sectors of the economy, 30 % of the country’s railroad shipments are carried out on metals producers’ orders, the sector consumes 33 % of all electric power, the production of metals accounts for 14 % of all fuel and 40 % of mineral resources. «The absence of balance in such an industry can lead to a collapse of the national economy, which, by its consequences, might equal Argentina’s tragedy», says Mikhail Tarassenko, president of the Miners & Metallurgical Workers’ Union of Russia (GMPR).

    «But, on the other hand, we fully realize that the time, when the State unconditionally subsidized restructuring old enterprises and forming new ones, has gone for good», he points out explaining the position of labor unions. «It goes without saying that this should be taken care of by enterprises’ owners themselves».
It would be a mistake to think that the mining-and-metals industry has been taken over by unscrupulous new rich and mafia, who have bought up enterprises for cheap and are now just pumping out profits. Rather, the opposite is true. For example, stockholders at the Lipetsk Iron & Steel Works are well known for their efforts to implement the long-term program of development and technical reequipment costirg $1bl. Owners and managers of largest companies – Severstal, MMK, Norilsk Nickel, UMMC, SUAL-Holding are also conducting a responsible policy, which takes into account interests of their personnel.
But, unfortunately, there exists a long list of enterprises where workers see no future for themselves. They have not been paid wages for months. Executives constantly change and managers often fail. It would make more sense either to close down such enterprises or convert them. However, the bankruptcy procedure is artificially restrained by regions’ administrations because local authorities are just unable to find jobs for all these people.
Neither employers and labor unions nor the State doubt that the time has come to reform the industry. The problem is in the price to be paid for progress and its more or less fair distribution. Positive results of reforming the metals industry will show themselves much later. And right now all comes to abolishing hundreds of thousands of unproductive jobs.

The rest camp of the Oskol Electric Steel Works. Every large metal producer in Russia has similar facilities where its personnel can have a rest for token payment

«Cutting down the labor force by 350,000 people in a few years creates a huge social problem», Mikhail Tarassenko notes. «When the program was being worked out at the Ministry of Industry, Sciences and Technologies, there were a lot of doubts whether it was proper to make these figures public, to disturb the society. However, with the support of employers’ organizations, such as Association of Russia’s metallurgists and Coordinating Council of Metals Enterprises, our union was insisting on letting the public know. Companies, enterprises, municipal and regional authorities, the federal center as well as workers themselves should get prepared in advance for the forthcoming transformations and take measures to prevent mass unemployment».
In contrast with other countries Russia does not have enough experience of reforming leading industries. And that lack of experience in the country will create negative social and economic aftereffects.

July 30, 1998, Chelyabinsk region, Russia. Miners picketing the Trans-Siberian main railroad

For instance, the restructuring of the coal industry took seven years. Although the State was an active participant of this process, large investments were attracted and reformers’ actions were widely publicized, the results were a failure. 158,000 people were let go, but only 12,500 new jobs were created. Coal miners started mass protests. In Moscow the encampment was set up near the government office building: representatives of different coalfields arranged an open-end demonstration to defend their rights. Protests even caused traffic stoppages at the Trans-Siberian main railroad, the country’s principal transportation artery.
Are there any grounds to expect similar protests in the metals sector given the fact that transformations being planned there are of a larger scale than the restructuring of the coal industry?
«Of course, nothing new will happen in our country. We are going the same way as the rest of the world», GMPR’s president continues. «In the last 20 years about
70 % of metal workers in West European countries changed the industry. And there were no destructive social conflicts along the way. Joining hands with business communities and labor unions, state authorities managed to introduce social dampers, to assume responsibilities and make peace with workers. Some were moved to enterprises in other regions, others were retrained and given an opportunity to get employed in, say, service industries. Of course, the high cost of directly firing people was a major factor in this case. It is not that expensive to dismiss a worker in our country. All that is needed is to give him a three-month notice in writing and a severance pay equaling his three-month earnings (with the current level of labor payments in the industry the sum amounts to about $ 600). And exactly because of it we are going to get a lot of problems».
In the opinion of the union’s leader, there is no way to avoid mass layoffs in Russia’s metals industry. In the West the reduction of personnel was due to a large-scale introduction of new technologies and this led to not only loss of some jobs but also to positive developments, such as the increase of labor productivity and wages, accordingly. In Russia’s case there are excessive labor force and outdated technologies. At the same time there is a persistent influence of different social traditions rooted in principles of general equality and averaging. Local union branches at enterprises are demanding «not to hurt workers» under any condition and saying «no» to layoffs. And is today’s payment not an insult to a highly skilled professional?
Here is one specific example. The operating personnel at Russia’s most advanced Sayansky Aluminum Plant with an annual production volume of 400,000 tons of aluminum numbers 5500 persons. At France’s Pechiney’s plant, which is similar by the production volume and age, there are 1200 people and Australia’s same size plant employs 1500 workers. It is true though that, according to Russia’s standard practice, maintenance and other workers not involved in basic production are, nevertheless, counted as an enterprise’s production personnel. The world’s aluminum-producing companies do not worry about preparing baked anodes – they just buy them. But the wage level of a metal worker in the West is ten, not three and a half, times higher than that of his Russian colleague.
«At the plenary session of GMPR last year we thoroughly discussed these questions and came to the conclusion that if our union continues to stick to its categorical positions any longer, then the industry, after all, may simply die away because it will become absolutely uncompetitive in the world market», Mikhail Tarassenko goes on to say.
The union’s president draws attention to one more matter of principle. The Russian government’s program says that 350,000 persons will be laid off in the metals industry over a five-year period. But at the same time no one clarifies this figure with regard to the industry’s structure and geography. However, the labor union should have an absolutely clear picture of which mills are to be declared uncompetitive and phased out, when and how. Today it is already necessary to start arranging social dampers together with the government, local authorities and enterprise management.
«Both the government and president of the Russian Federation recognize the importance of this problem. We would like to believe that the government-planned measures to support the industry in these complicated times will not only remain good intentions but will materialize into actual actions», Mikhail Tarassenko concludes.

Q   U   O   T   A   T   I   O   N «Absolutely identical trends are showing up in metals industries of different countries. In particular, it is obvious that these industries have an excess potential. Thus, workers are being laid off, various measures for restructuring are being taken, etc. These phenomena happen in all countries. That is why metalworkers of the world should consolidate and by making joint efforts start looking for a way out of the existing situation. There is no other choice available». Takeshi Ogino, President, Tekko Roren, Japan’s Federation of Steelworkers’ Unions (JSW) (during his visit to Russia)