Employment Policy in an Industrial Enterprise

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Employment Policy in an Industrial EnterpriseEmpl

    6. Employment Policy in an Industrial


    Tanya Metalina

    This paper is concerned with employment policy in industrial enterprises over the period 19914, based on our collaborative research in a series of industrial enterprises in Samara, Moscow, Syktyvkar and Kemerovo. We are concerned with a series of questions, including: how has employment policy in enterprises changed over this period? What form has the process of redistribution of labour within the enterprise taken? What are the reasons for retaining a substantial surplus of labour within the enterprise, when the volume of production has fallen so dramatically, so that most of the workers have nothing to do? The pa-per is based primarily on the experience of research on employment which we carried out in the joint-stock company Prokat where, in order to retain the la-bour force in conditions of a decline in the volume of production, a special structure was established the ‘Department of Free Personnel’. The fieldwork

    in Prokat was carried out primarily by myself and Pavel Romanov. Unless oth-erwise stated, quotations are from interviews which I conducted myself. The aim of the paper is not to draw general conclusions, but only to describe the processes observed in Prokat during the period of research.

    For a long time enterprises such as Prokat, which were part of the military-industrial complex, enjoyed much more favourable economic conditions than other enterprises. They always represented an example of stability and prosper-ity. Prokat is one of the largest producers of aluminium rollings in the country, employing over 22,000 people in 1988. For a long time it was a monopolist in the supply of a number of its products. In the Soviet period it was always con-sidered to be an exemplary enterprise, visited by numerous Soviet and foreign delegations as a model of its type. The factory supplied its products to more than 7,000 customers in all the republics of the former Soviet Union and to 25 foreign countries. Negative tendencies at Prokat were already becoming appar-ent in 1989, before the stable and prosperous situation was shattered by gallop-ing inflation and the breakdown of economic links in 1992, forcing the enter-prise to cut back its production. Demand fell sharply in the face of increases in the price of the product. By the summer of 1992 production had fallen by 30 per cent in comparison with 1989, and production for 1993 was less than a quarter that of 1989, falling a further 30 per cent in the first half of 1994. All of this could not but have an impact on the employment policy carried out by the enterprise. It is this aspect of its activity that became the subject of our investi-gation.


    The Soviet period of industrial development was distinguished by the stability of state orders, and therefore the stability or even the growth of the volume of production. Every enterprise tried to obtain the greatest possible number of workers, always using its reserve of labour power to manoeuvre in conditions of uneven production. The enterprise also needed additional numbers to carry out agricultural and construction work, assistance to the city in the improve-ment of public services and many other kinds of work which seemed to have nothing to do with industrial production, but which the enterprise had to carry out for various reasons. As a result up to one-third of the complement of staff of practically every enterprise were made up of such ‘superfluous’ people. As a rule, alongside the maintenance of surplus posts the enterprise experienced a high level of labour turnover among its low-skilled workers, and often did not have enough of them. Unskilled and low-skilled workers were in demand at nearly every enterprise. It was even more difficult to find good specialists. They usually worked for many years in the same enterprise and would only leave it for very important reasons. Such workers were not only in a position to find work easily in any factory, but would also be lured with offers of privileges and extra payments on top of their wages, above those which the worker enjoyed at his existing workplace. The state guaranteed everyone a job, so the loss of a job was no tragedy, and hands were needed everywhere, but especially in industry. The periodic campaigns to cut the labour force, which took place from time to time, did not change the general picture. ‘Theoretical workers’ were cut —

    they always had some ‘dead souls’ for this

    purpose, and ‘living’ workers were merely redistributed, so that two-thirds of

    those supposedly laid off in fact remained in the enterprise, where most people were offered a choice of one or two similar jobs. This often did not require even a change of occupation or any preparatory retraining. Even when some enterprises were required temporarily to cease recruitment (there was no re-cruitment in Prokat at the end of the 1980s), vacancies remained for low-skilled workers, and they would be filled by those punished for disciplinary offences. These were the jobs which had always been filled ‘from the street’. This was the period in which there was an absolute dearth of labour, when every enter-prise had a list of vacancies and at the same time maintained a complete ‘army’ of surplus people.



    The radical changes in the Russian economy have had a far from positive im-pact on the labour market. The structure of the economy is inadequate to the demands of the market. The uncompetitiveness of the products of most enter-

    prises in conditions of an open market, and the extremely low efficiency in the use of labour, give rise to a crisis of employment and the appearance of unem-ployment, which in the past was identified as an integral part of a capitalist economy.

    Economic reform in Russia has led to a significant fall in the volume of pro-duction, which has induced the enterprise administration to begin to reduce the number of employees. From 1991 on many enterprises gradually began to get rid of vacancies. As a rule the superfluous people were not officially made re-dundant, but the enterprises tried to deal with the problem of surplus labour through natural wastage, sometimes by pushing employees into voluntary re-dundancy (by moving them to lower paid jobs, or jobs with worse working conditions), sometimes resorting to moving workers from one enterprise to an-other. Thus in one of the shops in Prokat we got to know a group of cleaners. Three of them were women who had previously worked at another factory. Their section in that factory was closed as a result of conversion, and the sur-plus skilled workers were recruited by other enterprises in the city which at that time needed machine-operators. Thus the women came to Prokat. But then cuts began here too, and again they were not dismissed, but transferred to unskilled and, obviously, lower paid work. But even here they did not feel secure, be-cause they were all pensioners, some on the grounds of age, but others because they had worked for the required length of time in harmful conditions.

    They will get rid of us first of all, there is no work for young people, why should they keep pensioners? (From a conversation with a group of cleaners 23.02.92.)

    Nevertheless, in 1991 very few people were made redundant in the enter-prise. The problem was resolved basically by reducing existing vacancies, scarcely affecting ‘living’ people.

    In 1992 the collapse of the USSR, and the associated breakdown of eco-nomic relations, caused a further decline in the volume of production and made it impossible for the factory to provide work for all its workers. However, the management was in no hurry to get rid of its potential unemployed. At this time the most widespread response was to send people on administrative vacation, with reduced pay, or no pay at all, and to work a reduced working week. Work-ers were often assigned to work on improving the premises of the shop or on construction work. At the beginning of the shift they sometimes did not know what they were going to be doing that day, or whether they would be working at all. At the planning meeting before the shift the foreman, as a rule, would distribute the work, trying to place the workers so that they would take turns in doing their normal job and, alternatively, doing subsidiary or construction work. At that time there was not really any problem in finding work for auxil-iary workers since equipment needs regular servicing even if it is not working at full capacity and the old equipment needs extensive repair. This meant that it was usually core production workers who turned up doing the subsidiary and construction work. And, although such a state of affairs gave rise to more and more dissatisfaction on the part of the workers, nobody said anything about this

    openly for fear of ending up without any work at all (observation at morning planerka, 17.03.92, Irina Kozina and Tanya Metalina). This is what a senior foreman had to say about this:

    Yesterday at last they sent us a cleaning machine, and I sent the women to collect and load it. Not one of them complained, as they really should have done, although the work was very dirty and had no relation to their official

    responsibilities. They went off without a word and worked for three hours. In the past even to make such a proposal would have led to terrible conflict the whole day long, and to per-suade them to do it I would have had to bribe them and maybe also resort to threats. (Inter-view 2.02.92.)

    Until 1993, despite the considerable fall in production, the enterprise man-agement refrained from carrying out what would have been a deeply unpopular redundancy programme. The administration did all that it could to maintain employment, although it became increasingly difficult to keep up production capacity.

    The workers earnings fell, and this hit the main production workers espe-cially hard, often earning less than auxiliary workers. People increasingly feared for their jobs, and managers at different levels responded to expressions of discontent or demands from the workers with a single phrase: ‘If you don’t like it, get out’. The job had become valuable.


    Until 1993 the numbers employed fell gradually and smoothly. In 1991 they fell by 330, in 1992 by 908. The factory administration did not want to see any revolutionary transformations. During 1993 the course of events changed somewhat. By this time the enterprise had already been privatised as a joint-stock company, the distribution of shares had been completed and preparations for the first shareholders’ meeting were well under way. In these circumstances the administration announced its intention of moving from an employment pol-icy that guaranteed every worker a job to a policy based on economic feasibil-ity. A senior management group, headed by the executive director for econom-ics, on the basis of an analysis of the economic situation, determined the level of capacity working expected for the factory as a whole and for each of its sub-divisions for 1993. And since a further fall in the volume of production was considered to be inevitable, because of the reduction of demand for the finished product and the insolvency of customers, the programme anticipated the reduc-tion in the number of jobs and the number of employees in accordance with the fall in production. This analysis concluded that the number of people employed had to fall by 2,880 by the end of the year. One result of such an action would have been to increase the pay of the remaining workers. However, this plan was from the beginning very unpopular among the workers. Unemployment had be-gun to turn from an abstract fear into something very tangible. The administra-

    tion of the joint-stock company realised that conflict would become an integral part of such a programme:

    Who is going to want to find themselves without a job of their own free will, especially when the majority of enterprises in the city are also laying off surplus hands? (Interview with head of Personnel Department, 15.08.93.)


    The management of the joint-stock company planned to accomplish a number of important tasks in the process of reducing the number employed. The first was to rejuvenate the enterprise (at the beginning of 1993 the labour force in-cluded 2,500 people above retirement age). The second was to clean out all the drunkards and violators of discipline. The third was to reduce the number of women. This last task was not identified in a single official document but, in private meetings with management and members of the administration, it was mentioned more than once. The fourth task was to put a well-qualified worker in to every job by removing low-skilled workers.

    According to the plans of the administration, the process of redundancy should have proceeded as follows. The directorate would draw up an initial cal-culation of the numbers to be reduced in each subdivision and would send the subdivisions their estimated figures for the reductions to be achieved, broken down by quarters. The heads of the subdivisions would take these figures, to-gether with a list of pensioners working in their subdivision and the production programme for the year, and would then have to decide which workers they needed to fulfil the plan, and then get rid of the surplus people. Only hard-working skilled workers should remain. The result of this activity should be a redundancy order for each shop, after which those who were to be made redun-dant would be notified and invited to go to the factory Redundancy Commis-sion. The enterprise director ordered that retraining courses should be estab-lished within the technical training department to make it easier for those made redundant to secure subsequent employment. All those who wished to do so could attend these courses for two months, to be trained in specialisms which were in demand in the city’s enterprises, while retaining their earnings in their normal place of work.

    The chiefs of the subdivisions knew perfectly well how unpopular this pro-gramme would be, how many tears would flow, how much conflict there would be. After all, loss of work means the loss of all the means of existence. Thus the process of redundancy did not take place quite as it had been anticipated.


    The order to prepare redundancies in the company was issued in April 1993. The order included a particular formulation with regard to the pensioners:

    Employees who have reached pension age are offered the opportunity of retirement in con-nection with the reduction of jobs.

    In the shops this proposal was regarded as humane (although not, of course, by the pensioners themselves):

    You see the pensioners have already got a basic minimum so that, poorly, meagrely, they will survive on their pension. (Interview with senior foreman, 2.02.92, Irina Kozina and Tanya Metalina.)

    In addition they have a number of privileges. The factory pays a lump sum to everybody who retires, together with quarterly payments which depend on their length of service in the enterprise. Moreover, all pensioners can buy groceries at subsidised prices in the special factory shop, and they retain the right to re-ceive passes from the trade union for the sanatorium and holiday centres on the same basis as employees of the enterprise. Nevertheless, not all pensioners wanted to retire.

    If a pensioner whom the shop commission has offered the chance to retire, does not want to do so, his job is eliminated. (Interview with chief of shop department of labour and wages, 25.10.93.)

    Many pensioners faced the choice between retiring of their own free will, and receiving all the benefits on offer, or going on working until they are sacked with two months pay.

    Some pensioners, of course, will be kept on, but only hard-working highly skilled specialists. (Interview with shop chief, 27.04.93.)

    For example, one of the mechanics was a highly skilled turner, who in fact did all the work for the entire brigade of repairmen. He was long past retirement age, and had already been offered the chance to retire twice, but both times the brigade succeeded in keeping him.

    Some employees who had reached retirement age left the factory for a well-earned rest immediately after the issue of the order, but the majority of the older workers left with a heavy heart, despite the benefits they had been of-fered. Some of them could and still would have worked, but it seemed that they were not needed. And many of them simply could not imagine being outside the factory in which they had spent their whole lives.

    The situation was somewhat different with those who had poor disciplinary records. They had never been respected. The normal disciplinary sanctions for offences were the loss of bonus, loss of holiday pay, the disapproval of work-

    mates but only in extreme cases dismissal. If it was a first offence, or if the of-fender was a meritorious or kadrovye worker, the collective could petition for

    him to keep his job. But now the situation has changed. Drunkenness at work, absenteeism, and other disciplinary violations now result in dismissal in most cases.

    As a result, twice as many people were dismissed for absenteeism or turning up for work in a state of intoxication in 1993 than in 1989. This does not by any means imply that there has been any increase in such offences, but only that the attitude to them has become much more strict. For example, in 1992 497 of the 500 recorded cases of absenteeism or drunkenness in Prokat resulted in dismissal, with only three people keeping their jobs (Report of Personnel Department on Discipline in Prokat, 1992). The workers themselves have in-creasingly frequently become the instigators of the dismissal of offenders. The administration actively took advantage of the situation that had developed, since it provided a real chance to reduce numbers by methods which were so-cially approved by the collective.

    In these conditions many women felt abandoned. The personnel manager was blunt:

The work in our factory is far from being women’s work, and the workers themselves know

    it: this one is on maternity leave, another is off sick, a third has a certificate. And they will cut jobs such as controllers, laboratory

    assistants, cleaners, cloakroom attendants, and these are basically women’s jobs. (Interview with Personnel Manager, 15.08.93.)

    According to the head of the department of labour and wages in one of the shops, they will also get rid of women working at heavy men’s jobs, press op-

    erators for example, since there are now a lot of men in the factory with this speciality (interview, 25.10.93). Even at the beginning of 1993, when far from everyone had realised that the once prosperous giant could no longer provide all its employees with work, the women were the first to become anxious. Women of pension age became keen to take their pensions, rather than waiting to be asked. Women in skilled but physically heavy work quietly began to look for other jobs for themselves, taking the place of women workers who were re-tiring. For example, in one of the shops they closed one of the furnaces in July, leaving nine women annealers without work. However, they had known about the decision the previous winter, so the women were ready for it. Five of them did not wait for official redundancy but transferred to another shop on their own initiative, while three took their pensions. Only one of the nine women tried to stay in her job, and she was offered a transfer to a job as a cleaner. She is a single parent, bringing up four children on her own, and turned to the trade union committee for help. The president of the trade union committee and the foreman discussed the matter for a long time. The foreman had to draw up vari-ous documents: a certificate of her qualifications (her qualifications were low), the basis of the transfer (the closure of the furnace), a reference for her:

    Her qualifications are low, she does not show any particular enthusiasm for work, she often takes time off sick, the work is hard, and the furnace is having to be operated by two women instead of three. Nobody in the brigade wants to work with her. They keep her only because they take pity on her because she has children. And so now we have found her a job in the shop, she certainly won’t get a job anywhere else. (Interview with shift foreman, 11.08.93.)

    The end result was that the woman lost her job all the same and became a cleaner in this shop.

    There has been practically no recruitment of new workers to the factory. Oc-casionally they take on auxiliary workers fitters, electricians, welders and so

    on, but only if they are highly skilled with a faultless labour book. Vacancies and replacements are filled by those threatened with redundancy elsewhere. ‘We turn away women who come to the personnel department in search of work at once, without even looking at their labour books’, said the deputy head of the personnel department in an interview (08.09.93).


    The number of employees fell steadily, but not quite in the way it had been planned. A striking example of this is the shop in which we carried out our re-search. According to the company’s order the number in this shop should have been reduced by 258 people. The shop management calculated how many peo-ple were needed in each section, and the surplus people were subject to redun-dancy. After this the power to select people for dismissal was passed to the middle managers, to the foremen. The foreman himself had to decide which people the section could not do without, and which people were superfluous. The foreman, who has worked in the shop for decades, who knows everything there is to know about every one of his workers and is familiar with all of their problems and misfortunes which he has been accustomed to thinking of as his own over many years in the job, had to decide to whom to issue redundancy notices the next day.

    All this is not right. The administration should issue the notice, even if it is on the recom-mendation of the foreman, it has to be their decision, and not the foreman’s decision, but they tell the foreman in advance, you decide yourself, but I have to work with them. (Inter-view with shift foreman, 7.04.93.)

    The foremen in their turn, trying to avoid responsibility for deciding the fate of their workers, shift it to the workers themselves, taking the problem to meet-ings of the shifts and section for resolution. And because the threat to their jobs has become real, and nobody wants to find themselves without work, the sim-plest way of getting rid of competitors was their dismissal on the basis of a de-cision of the brigade as a whole. This was easiest with those with a poor disci-plinary record, the attitude to whom had become one of intolerance this was

    a chance to reduce the numbers without waiting until they sacked you. In the

    past it was mostly young workers who had not yet acquired a trade who were sacked for disciplinary offences (it was considered that for them this should be a lesson), while all the sins of kadrovye and high-skilled workers were, as a

    rule, forgiven. But now neither their skill nor their authority could save them, the brigades got rid of every offender with a feeling of some relief. In some cases collectives casually threw experienced kadrovye workers out of the fac-

    tory gates.

    However, in general the shop was in no hurry to reduce numbers, relying on natural wastage. And although times were hard, people did move, fell sick, transferred to other jobs. At the end of the year the head of the department of labour and wages of the shop reported that they had achieved the necessary re-ductions without having had to make any compulsory redundancies.

    Yes, of course, fewer people left voluntarily, but people did leave, it is a shame to say it, but every new letter of resignation made us glad. (Interview, 25.10.93.)

She herself kept a precise record of everybody who left.

    Throughout this period discussions of future redundancies did not cease. The ‘invitation’ of the factory administration to those beyond pension age to leave voluntarily, dismissals of those who violated disciplinary regulations and end-less rumours provided direct and constant confirmation that the situation was serious. Throughout the summer, against the background of hysteria worked up around redundancy, numbers kept constantly falling by natural wastage. Work-ers of various trades and various skill levels left, young and old, men and women, undermining the plans of the administration to implement an active policy of restructuring the labour force. The head of the Personnel Department said:

    The cut in numbers is happening quietly here, we are not using compulsory methods. People are leaving the factory, although fewer than in the past, and we sack people with little cere-mony for disciplinary violations. At the same time we have cut recruitment to a minimum. The number of industrial personnel is falling. We still find jobs for the majority of employ-ees, often with lower pay, involving a move to a different trade, another post, in many cases lower skilled work, but in any case it is better than throwing someone on to the street. (Inter-view, 15.08.93.)

    The July shareholders’ meeting decided that the gentle methods of reducing numbers should be abandoned in favour of a strict policy in the sphere of em-ployment, such as had had no place in the enterprise in the past. In September a new order was issued, instructing the chiefs of subdivisions to cut the number of employees by a further 1,170 people by 1 November (and not by the end of the year, which had been the date specified in the April order). The order speci-fied the number to which every subdivision had to reduce its staff through re-dundancies. (The hopes of the chief of the shop’s department of labour and wages that the numbers would be achieved by natural wastage were not justi-fied; in their shop more than sixty people were issued with redundancy no-

    tices.) Everybody selected for redundancy received, alongside their redundancy notice, an invitation to come to the factory Redundancy Commission.

    The Commission was created in order to monitor the legal correctness of every dismissal, to explain their rights in this situation to each person, and to help those dismissed to find work. (Interview with deputy chief of personnel department, 8.09.93.)

    The Commission offered those identified for redundancy a list of vacancies in the factory. For women these were basically low-paid jobs as ‘junior service

    personnel’ (MOP); for men they were ancillary and auxiliary jobs. During Oc-

    tober the Redundancy Commission sat almost every day. Then the lists of those made redundant were passed to the trade union committee for approval, al-though this was a purely formal step since the trade union had already agreed to the redundancies at the equivalent meeting at shop level.

    The new economic situation developing in the enterprise with the sharp fall in production, revealing a huge number of surplus people in the shops, had prompted the management of the company to take steps to correct or, more ac-curately, to soften it. A new employment policy, based on economic expedi-ency, had been promulgated which threatened to lead to an avalanche of redun-dancies. But to many people’s surprise this did not happen. As so often in the past, practice did not correspond to policy. The reduction of employment, as an integral part of the new economic policy, was proclaimed by the management of Prokat, but at the level of the shops it was avoided in every way possible, with a complete reliance on natural wastage, with the retirement of working pensioners, the dismissal of violators of disciplinary regulations, and the ending of recruitment. In August 1993 there was an order to withdraw from all con-tracts with small enterprises and co-operatives working with the enterprise (there were by then more than 100), with the aim of transferring redundant workers to this work. More than 300 people were retrained and redeployed in the course of the year, while 500 new jobs were created in connection with the expansion in the range of consumer goods produced and the growth of produc-tion for export. Most of those who were declared redundant were found jobs in their own or another shop, or in the factory’s social and welfare establishment. Alongside the reduction in numbers, there was an intensive redistribution of labour within the framework of the enterprise. Usually the new work was less highly skilled and less well paid than the previous job but, nevertheless, having got such a job the workers were in no hurry to give it up because the fear of losing their job remained. As a result of all this only 533, rather than the 1,170 envisaged, were sacked. Those who were thrown onto the street, apart from pensioners and absentees, were the least skilled employees, adding to the grow-ing army of unemployed. Meanwhile, the enterprise found itself short of the most highly skilled workers, particularly in auxiliary occupations such as elec-tricians and welders, and recruitment had to begin again, although only those with high qualifications and experience and faultless labour books were taken on.

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