Anatoly Sysoyev
President, Association of Industrialists, Russia’s Mining & Metallurgical Complex (AMROS)
The next agreement on tariffs for 2003 to 2005 has been reached between representatives of employers and labor unions of Russia’s metallurgy. However, this time around discussions were lagging and they were particularly intense. Eurasian Metals asked Anatoly Sysoyev, President of the Association of Industrialists of Russia’s Mining & Metallurgical Complex (AMROS) and Mikhail Tarassenko, Chairman of the Miners & Metallurgical Workers Trade Union to comment on reasons, which complicated the dialogue, on the reached compromise itself and prospects for social partnership.
Anatoly Sysoyev |
|
TWO MISSIONS OF AMROS
As an organization of employers, AMROS, which was founded in 1998, has two tasks to accomplish. One of them is to lobby for interests of the country’s metallurgy. This lobbying is being done, above all, through the Russian trilateral commission with each side – employers, labor unions and the government – having 30 representatives. The commission’s members are working out a general tariff agreement, which is a conceptual document covering the most important directions of the country’s development. Besides, our association is in a constant contact with the State Duma and other state power structures: it participates in sessions and parliamentary hearings as well as examines draft laws.
Another important task of AMROS is to work out the industry’s tariff agreements with labor unions. Even the first one, which was signed in 1999, permitted the prevention of serious labor conflicts at enterprises of the mining-and-metallurgical complex. It was a comparatively new experience for the Russian industry and our agreement served as a guideline for other associations. In 2000 we successfully concluded the tariff agreement for 2001 and 2002. But since 2001 the social policy of the State has changed.
The stumbling block was a new method of determining the subsistence minimum, which at once raised it by 1.5 times against inflation rates in the given period. According to the available information, starting in 2004 new changes will take place again. Requirements will become even higher but the objectivity of assessments will not be guaranteed. Thus, it gave rise to many problems, which demanded fresh approaches.
Talks between labor unions and employers about a new tariff agreement were not simple but, anyhow, we reached the consensus. In my view, both sides began to understand each other much better. Once again we were convinced that, while defending labor interests, our opponents at the same time regarded their mission with much responsibility. Leaders of labor unions share our opinion that they should not put forward excessive demands and that there should a reasonable balance between expenses on wages and investments in development.
WHEN THINGS CHANGE...
As for preparing the tariff agreement for 2003 to 2005 employers were represented by officials of major companies such as the Russian Aluminum, UMMC, SUAL Holding, Magnitogorsk Iron & Steel Works, Chelyabinsk Zinc Plant and others. So, there is no reason to question the quality of the project that was worked out. In my opinion, objections by labor unions, which delayed the negotiating process for a long time, were provoked by the change of external conditions.
The new Labor Code was put into effect in Russia. Labor union members did not take into account this factor quite fully and stuck to the old tactics. On the one hand, they wanted to secure in the tariff agreements those provisions, which already became legally regulated. And, on the other hand, they made demands that contradicted the very letter of the new law. AMROS thought that they should not do either and, finally, the labor union recognized that we were right. On the whole, our negotiating position was sufficiently simple. If any point of the new tariff agreement could cause some serious controversies at enterprises, then, we defended our position in accordance with the law. And in those cases, when employers were interested in coordinating their actions with labor unions, we decided to give the right of choice to companies’ leaders themselves, the more so as the Labor Code provides for appropriate procedures on this score.
In 2002 the Russian government approved the concept of restructuring the country’s metallurgical complex. We looked at it without any bias: how did our industry compare with its main competitors in the West? The answer to this question was disappointing: if in the coming years the Russian metallurgy failed to reach a higher level, then, we would irrevocably lose our positions in world markets. At present, the basic production capacities are overloaded with auxiliary functions, the labor productivity is low and rates of technical re-equipment are obviously insufficient.
Shareholders and managers of leading companies are already taking necessary, though difficult, decisions. Many plants and integrated mills were deprived of unspecialized structures that employed from 10 % to 20 % of the personnel’s total number. These actions required large additional expenses: it was necessary to make severance pays, to grant early pensions and provide other kinds of compensatory benefits. As a result, companies’ financial potential was down significantly. At the same time, economic conditions for the metallurgical business were constantly worsening. For example, in 2002 tariffs on electric power and natural gas increased 30 %, while the steel industry raised prices for its products by no more than 6 % and prices for non-ferrous metals went down altogether. The emerged disproportion directly results in the decrease of companies’ profits.
In disputes with labor unions we insisted that all these circumstances should be also taken into account.
WILL THE STATE BECOME OUR ALLY?
As is known, in recent years prices for main non-ferrous metals in the world market went down significantly. There is a tense situation in the area of steel trading: the U.S. increased import duties and Europe introduced new restrictive quotas. The situation in Russia is different: the government not only refrains from taking protectionist measures in the interests of national metal producers but it places on them an additional burden by adopting export duties.
We regard the policy of the Russian Ministry of Finances and Central Bank as erroneous. It is known that the Central Bank is swiftly accumulating budget moneys: today it is estimated at 1.5 trillion rubles (with exchange rates of $1 equaling 31 rubles and 1 euro reaching 35 rubles). The Ministry of Finances is also freezing large sums of money under the pretext that it is not the first year that the federal budget is in the black. Substantial funds are being accumulated by off-budget funds. By our estimates, the State possesses almost 2 trillion "non-working" rubles altogether.
Are there any limits to saving money? The time has come long ago to invest these funds in the country’s economy either directly or by encouraging these investments through adopting stimulating normative acts and establishing appropriate mechanisms.
Nothing is clear about aims of the current currency and financial policy as well. For a long time already the U.S. dollar exchange rate has been frozen. Our calculations showed that basing on inflation rates since 1999 the U.S. dollar should have been worth now between 44 and 46 rubles. So, exporters are losing no less than 12 rubles per each U.S. dollar earned by selling metal. In three years they missed 1700 billion rubles in profit. Yes, the process of strengthening the ruble should probably go on but not with such an enormous lag behind rates of inflation. Thus, there is a question: why is this policy directed against interests of the Russian economy?
|
|
"It is about time to introduce a similar program in Russia as well. By the way, a portion of funds accumulated by the State could be directed to form such a restructuring organization."
Anatoly Sysoyev
|
| |
|
There is a need for new rules of the game, which would serve business as a kind of signal: invest your money in modernizing production capacities! This might be a super-accelerated amortization (from 30 % to 40 % of all capital investments are written off on it immediately after commissioning new production facilities), profit tax benefits or tax exemptions for that portion of capital investments, which is directed at making innovations and arranging the manufacturing of highly effective products.
But let us get back to the problem of restructuring the Russian metallurgical industry. It would be hardly possible to implement such a large-scale and nationally important program without the state assistance. We studied the experience of Germany: this country’s government is taking the active part in restructuring. Here is a typical example. A company, which employs 12,000 workers, is ready to use just 3,000 people for manufacturing the same volumes of products but of better quality and with observance of higher standards of ecology and labor protection. A project is officially examined and after the approval a company gets an interest-free credit from the restructuring fund and it is exempted from taxes. Personnel’s retraining is arranged and those, who have less than five years before retirement, receive an opportunity to use a compensatory fund specially set up for this purpose.
It is about time to introduce a similar program in Russia as well. By the way, a portion of funds accumulated by the State could be directed to form such a restructuring organization.
BEFORE PROMISING...
Being surrounded by plenty of unsolved economic problems we as responsible employers cannot take upon ourselves any far-reaching commitments. For example, we can commit ourselves to conduct the indexation as soon as inflation rates increase the threshold of 5 %. But we cannot guarantee the growth of actual wages by 5 % to 10 % a year as labor unions demanded.
Such demands should be addressed first to lawmakers asking them to take care of incentives to raise actual wages. Today, taking into account taxes for the labor payment fund each ruble added as a wage raise means the increase of expenses by 1.5 rubles. That is why employers would like to see the so-called "single social tax" reduced from 35 % down to between 20 % and 25 %. At the same time it could be possible to specify that those enterprises, which raise actual wages by this amount, can use the provided privilege.
In contrast to labor unions we think that wages should be raised depending on the growth of labor productivity and not on rates of inflation. There cannot be surplus profit in the metallurgical business. That is why we proposed to leaders of Russia’s mining-and-metallurgical labor unions to work out a plan of joint actions: when enterprises get additional funds, a considerable portion of them should go to labor payments, as the existing tasks are being accomplished.
In our turn we accepted the initiative of labor unions and worked out the method of calculating a social standard for metallurgy. This social standard is a wider category than the subsistence minimum. It includes not only the cost of the consumer’s basket but also expenses on health care, education, family life in general.
Certain approaches to accomplishing this task have already appeared at enterprises of SUAL Holding in particular. The company is using such a concept as "socially protected provisions at the social development fund". What does it mean? It is people’s health, above all. It is annual medical check-ups, the company’s own polyclinics, preventive clinics, sanitarium treatment. In 2003 the holding allocated for these purposes as much funds as SUAL-incorporated enterprises asked for.
In 1996 the new version of the European Social Charter was adopted. It makes higher demands to businesses and the State with respect to social guarantees for a worker. Russia signed this document in 2000 but the country has not ratified it yet. AMROS is actively advocating the European Social Charter. We worked out many provisions taking into account precisely these standards and our provisions were included in the industry’s tariff agreement. 
|
back
