Corporate Social Policy as Part of Social Policy in Russia
Business ventures, and particularly large enterprises, cannot ignore the social and economic problems of the regions in which they operate. The unsatisfactory situation regarding the provision of medical services, education and social security in the regions makes itself felt in the decline in the replenishment of the workforce. Extreme differentials in income among the population and the large proportion of those living in poverty lead to a growth in crime as well as social and political instability. It is no accident that the majority of large enterprises consider the social implications of what they are doing in their day-to-day decision making. In this sense the social responsibility of enterprises is linked to their long-term interests in their own continuing growth as well as in overall stability and positive economic outcomes. I would like to use this opportunity to speak about MMC Norilsk Nickel’s social policies, and of the problems that the company comes up against as a result of the conditions of incomplete institutional reform that currently prevail. MMC Norilsk Nickel is a unique metallurgical venture, and is the world’s leading producer of nickel and palladium. The company’s various enterprises produce somewhere in the region of 20 per cent of the world’s nickel, 20 per cent of cobalt, 3 per cent of copper, and more than 40 per cent of all platinum group metals. The company’s management fully recognises the responsibilities that come with being the focus of the communities in the areas in which it operates in the harsh conditions that pertain in the Far North, and, pursuing its long-term strategic aims regarding the development of the company, pays great attention to the full range of social issues. Our policy stems from the fact that investment in people and in carrying out effective social programmes pays for itself in the form of financial growth for the enterprises themselves, as well as in terms of positive social effects from which society as a whole benefits. It is no secret that in the middle of the 1990s the company was going through an extremely critical period. Production of goods had fallen by almost 50 per cent, labour productivity had fallen by almost 40 per cent in comparison with 1989, debts to budgetary and non-budgetary debts had grown and there were delays in paying wages. Among the company’s main priorities, apart from bringing about greater financial and procedural discipline, re-establishing its finance base, installing up-to-date equipment and so on was the task of developing and implementing an effective social policy based on transparency and honesty, which showed respect for and consideration of the workers’ interests. After all, of course, it is people, together with their aptitudes and their desire to work well that are the guarantor of competitiveness in the market and efficiency of production. A few words concerning policies in the area of workers’ wages, guarantees and benefits. The main principle of the company’s policy is that wages should rise in accordance with productivity of labour. As a result of the workforce’s intensive efforts, the last four years have seen an increase in the volume of metal production of 1.5 to 2 times, with nickel production doubling, a 1.6 increase in the production of cobalt, and a 70 per cent increase in the figure for copper. Production costs for each ruble’s worth of production have gone down by more than 25 per cent. Labour efficiency has improved more than two-fold. Payments in tax and duties and so on have all increased. The company contributes more than 50 per cent of all revenues for the Krasnoyarsk regional budget (while its workers account for only slightly more than 2 per cent of the population). It also contributes over 50 per cent of the Norilsk city budget, and accounts for 80 per cent of the Taimyr Autonomous Region’s budget. The company also has a policy of strictly adhering to state legislation regarding the payment of wages, fulfilling all state standards regarding wage payment for the regions of the Far North, including making additional payments in order to fulfil functions that, according to federal legislation (“State Guarantees and Compensation for Those Who Work and Live in the Regions of the Far North and Similar Climates”) should be financed by the state. In the conditions that prevail in contemporary Russia, enterprises, particularly the large enterprises that towns and settlements in the Far North rely on for their existence, have to deal with the necessity of solving a wide range of additional problems, from providing their workers with supplementary guarantees and benefits to dealing with provision for vulnerable sections of society and developing the social infrastructure of towns and settlements. Considering that such systems as social security, labour relations and other important aspects of the fabric of society are only now starting to take shape, there is a lack of ready mechanisms for resolving concrete problems. The development and implementation of social procedures that provide for the most efficient resolution of social and economic problems (while taking into account the interests of all those involved) has taken on a particular significance. Such social procedures are being conducted in the form of targeted comprehensive social programmes aimed at improving the quality of life for the company’s workers and for the population of the region as a whole. These methods have allowed the company to reduce its workforce from 136,000 to 100,000, but without adding to the number of the unemployed in Russia today. The main thrust of these targeted social programmes is in assisting with the resettlement of the company’s pensioners in more climatically hospitable regions of Russia. The company is operating a programme that involves the payment of financial assistance to workers and non-working pensioners, thus enabling them to obtain housing on the “mainland” (as the vast bulk of Russia is known to those living in the Norilsk area, which is to all intents and purposes cut off by the absence of conventional road and rail links) – [translator’s note]. Since 1997, over 9,000 people have taken advantage of this scheme and relocated to more temperate regions of Russia. Another programme, the “Six Pensions” programme, was launched in 1999 with the aim of creating better conditions for pensioners to leave the Norilsk Industrial Region, as well as easing the period of adaptation to their new environments. Under the scheme, workers of pensionable age who are entitled to a state pension, and who leave the company and move away from the Norilsk Industrial Region, receive an additional pension paid by the company to the tune of six times the state pension once a month for a period of two years. At the present time more than 5,000 of the company’s former workers are in receipt of this additional pension. These programmes, while offering assistance to pensioners in getting away from the harsh climatic conditions of the Far North at the same time allow the company itself to optimise the number of jobs it provides without resorting to mass redundancies. It also means that the company can offer jobs to the young people of Norilsk, avoid having an ageing workforce, and lend support to the social stability of the region. Particular attention is being paid to safety in the workplace and the provision of safe working conditions. Safer and better working conditions go hand in hand with the re-equipping of the company’s facilities. The task of increasing the efficiency of production and ensuring our competitiveness in the market is dependant not only on modernisation and bringing our technology up to date, but also on continually improving the abilities and potential of our workers. Since 1996 the amount of training provided for our workers has increased 1.5 times, while our managers and specialists now receive 3 times more training. A network of study and training centres has been set up to supply the training needs of workers in more than 200 areas of work. Our managers and specialists are being trained at leading establishments both in Russia and abroad. At the present time practically all workers are qualified in two professions, while 40 per cent of workers have three or more separate trades. This means that they can contribute in various ways, which makes for high levels of efficiency in the workforce and increasing productivity. The management and shareholders fully recognise that personnel development and investing in people is by far the best guarantee of the company’s long-term competitiveness in the world market. The company pays particular attention to the rest and recuperation programme it runs for the benefit of the workforce. Each year, a quarter of all the company’s workers are provided with courses of rest and recuperation in sanatoriums in Russia. The programme for the development of physical exercise and sport regularly organises tournaments and sports festivals for the workers, and the company’s many facilities are home to more than 100 sports centres. Mindful of its responsibilities for the well being of those living in the territories in which it operates, the company conducts programmes aimed at improving the living conditions of the local residents. A programme is being financed to provide assistance to out of work pensioners, orphans, children with physical disabilities and other vulnerable groups. The company also funds the acquisition of medical equipment needed by local healthcare facilities, equipment for schools, sports centres, and the running of various events. It supports social organisations in the Norilsk Industrial Region, as well as lending support to cultural organisations and the development of physical education and sport. The strategic aim of this work is to support the young generation, to help talented youngsters make the most of their opportunities and to offer continued support and leadership to the educational institutions in the region. The company has also set up the “North Star” sports camp for the benefit of children with behavioural problems, and has opened the Norilsk Cadet Centre in the south of the Krasnoyarsk region. The company pays particular attention to its programme for the assistance of the native peoples’ of the north who live in the Taimyr autonomous region, and the population of the region in general. The programme includes providing material and medical assistance to socially vulnerable groups in settlements along the Yenisei River and in settlements on the tundra. It also provides for the support and development of the settlements’ social infrastructure, which includes the acquisition and operation of electricity generating systems, the construction and equipping of hospitals and schools, targeted programmes to support the children of the area, the supply of equipment that enables local people to engage in their traditional trades and crafts, and the development of mutually beneficial cooperation. Norilsk Nickel’s various enterprises spend large amounts of money on measures to protect the environment. A programme is being planned to recycle gas emissions and radically improve the ecological conditions in the regions where the company is operating. We should also make mention of the problems that the company is encountering in carrying out its socio-economic policies. In a situation where legislation has led to the absence of any kind of economic stimulus for business concerns to maintain the housing stock and property in the social and cultural spheres, and while these properties are being handed over to municipal authorities, the state has still not brought about the conditions necessary for the maintenance of this vitally important infrastructure, particularly in regions that suffer from harsh climatic conditions. A good example of such a state of affairs is the Norilsk Industrial Region. Until as recently as 2002, the company’s subdivisions were responsible for maintaining practically the whole of the housing stock in the Norilsk Industrial Region as well as roads in Norilsk and the greater part of properties in the social sphere. They also provided both municipal and regional passenger transport, as well as providing the local residents with a telephone service. At the present time, the company is transferring social and cultural properties and housing stock to the municipal authorities. However, taking into account the inability of the local authorities to fully finance the maintenance of these properties, because of their lack of resources, the company is providing grants so as to avoid any risk of these properties falling into ruin. The company’s payments to support the Norilsk Industrial Regions’ social sphere (from after-tax profit) in 2002 came to 4.1 billion roubles (4.5 billion roubles in 2001). Today, the company faces a very serious choice. Either we make large investments in order to increase our competitiveness in the world market, or we continue to maintain the Norilsk Industrial Regions’ social sphere to the tune of over 4 billion rubles. This would be at the cost of the company’s intensive development and construction of new facilities on the Kola Peninsula, which would create new jobs and increase the level of our contributions in the form of taxes and contributions to the state and local authorities at all levels. With regard to all this, one of the key problems with state social policy, as before, is the lack of resources at the disposal of all the responsible branches of the state authorities and the local administrations. The next problem remains the state of legislation in the social and labour spheres. An example of this is the legislation concerning the carrying out of medical examinations of workers that is inappropriate to the conditions that prevail at present in production and in the regions. The company is spending enormous amounts of money at the moment to ensure that its workers undergo such examinations, as a result of which people who have been offered work are unable to take up their positions because they are declared unfit to do so. This is all because the nature of the testing has nothing to do with whether a given person is fit for work or not. It is therefore essential that there is an in-depth revision of the relevant legislation with the purpose of creating conditions that both enable enterprises to function efficiently and that protect the health of workers, particularly those operating in hazardous and difficult conditions. The issue of reforming the pension system is no less important. The company strives to guarantee its workers’ level of pay as well as paying in full all its legal obligations in the form of taxes, duties, etc. Employers today can’t help but wonder what people, in whose name these deductions are paid in order to ensure their well being in old age, get back from the state. For example, even taking into account the regressive tax scale, for each pensioner with an average income of 21,500 roubles, we contribute around 5,000 rubles a month. When a worker of ours reaches pensionable age, even if he has worked for 25 years, he can count on receiving an average pension of 2,500 roubles. Workers engaged in mining and those working underground can earn still more, say 40,000 roubles, but on retiring find that their pension represents no more than 7 per cent of their former wage. Such a situation, in our opinion, is absolutely unacceptable, and it is necessary to ensure that the level of contributions made by enterprises and the level of social security provided are both adequate. The company’s experience shows quite persuasively that an individual enterprise, with the necessary intent, and with the support of its workers, is capable of providing a certain level of social provision. However, this can become much more effective if it is carried out in conjunction with an effective state social policy. |
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