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02.07.07
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Poor Strikers And Rich (Mis)Managers
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By Dmitry Babich
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A Labor Conflict Sparks an Interesting Discussion
An employees’ strike at AvtoVAZ – Russia’s biggest car maker and one of the Kremlin’s most cherished “national champions” – sparked a discussion on the gap between workers’ and managers’ salaries in the Russian media.
The strike, scheduled by an independent trade union Yedinstvo (Unity) for July 31 turned out to be a flop. Of 110,000 workers at AvtoVAZ only 150 (according to AvtoVAZ management) or 400 (according to Unity’s leaders) put down tools for several hours after lunch time. However, the strike caught the attention of the media long before it began, for two reasons. Firstly, AvtoVAZ is run by Rosoboronexport, the Russian arms export monopoly, whose head, Sergei Chemezov, is seen as one of the key figures in the Russian government. Chemezov enjoys the special trust of president Vladimir Putin, who put him in charge of Rosoboronexport back in the year 2000, soon after coming to power. There are even rumors that both men got to know each other in the early 1980s when they worked in East Germany, albeit in different offices. Chemezov became the chairman of AvtoVAZ’s board of directors in December 2006, so a successful strike would have been a blow to his prestige.
Secondly, the workers demanded that their salaries be raised from the current 14,500 rubles ($566) to 25,000 rubles ($977) per month; quite modest amounts for “the flagship of Russian industry”, as AvtoVAZ was branded after Rosoboronexport took control over a year ago.
The figure of 25,000 rubles was not a workers’ invention. As a Russian daily Trud reported, the local United Russia branch waged its most recent local election campaign in Togliatti, where Avtovaz is located, on the basis of a commitment to raising a worker's average salary to 25,000. For the city, named after an Italian communist leader and populated mostly by car makers who have been producing cars based on Italian Fiat models since the early 1970s, the workers’ salaries is a hot political issue.
“The planned strike bears a political character,” the plant’s management said in a statement several days ago. Instead of staving off the heat from the managers, this statement only increased the media’s appetite for gruesome details and sour comments on the worker/manager divide in Russia.
“Russia trails only Saudi Arabia, United Arab Emirates, and Hong Kong by the amounts of money which the country’s managers get,” Trud commented. “Last year the average annual income of a Russian manager was $97,714. This year it is $157,348, which means that it grew by 60 percent. Meanwhile, the country’s GDP grew by only 6.8 percent.”
Trud’s commentator, Alexander Protsenko, conducted his own research on the wages and incomes of the top managers of country’s most important companies and came to astounding conclusions.
“According to Gazprom’s financial records, members of Gazprom’s board of directors got a monthly wage of $1.8 million in 2005. In December 2005 Gazprombank paid to the nine members of its board bonuses which amounted to $19.6 million. The chairman of the board, Gazprom’s CEO Alexei Miller, got $3 million, while his deputies and members of the board got $1-2 million each.”
Protsenko said that his research was based on the official financial statements from Gazprom and other top Russian companies. Citing these sources, he also wrote that United Energy Systems (RAO UES), Russia’s electric energy giant, suggested a lucrative “option program” for its top managers. Under this program, managers could by UES shares at a price of $0.292 per share and then sell them at a price 4.6 times higher than the original one. “The total cost of the program is $455 million with [CEO of UES and Russia’s former privatization boss] Anatoly Chubais getting $20 million from this,” Protsenko writes.
Gazprom’s press service was unavailable for comment on the situation on Thursday. However a representative of the press service of RAO UES, who refused to identify herself on the phone, said that the decision to start the option program for “key associates” of RAO UES was taken four years ago, in August 2003. “It was decided then that the company would be completely reformed over a few years, ceasing to exist in its current form,” the RAO’s representative said. “So, in order to stimulate the staff to increase the company’s capitalization, it was decided to give the top managers an opportunity to buy the company’s shares in July 2007 by their nominal value of 2003. This decision was approved by the board of directors, where the state’s representatives have a say.”
The representative of RAO UES refused to confirm or to deny if Anatoly Chubais got any dividends from the option program saying that “it is indecent to look into another person’s pocket.”
But maybe, the situation has changed for the better between 2005 and 2007? No. According to the records of Transkreditbank, connected to Russia’s railway monopoly RZhD, the monopoly’s CEO Vladimir Yakunin received a bonus of 21 million rubles this year from Transkreditbank, Trud reports. RZhD does not publicize Mr. Yakunin’s official salary for his executive activities at RZhD.
“What we see in Russia today is a powerful fusion of state officials and big business,” said Boris Slavin, an expert on capital and labor relations currently working as deputy head of The Gorbachev Fund in Moscow. “Sometimes it is difficult to tell a high official from a big businessman. These people are the real ruling class in Russia now and their incomes are just one more proof of this fact.” |
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