HR Director of JSC ArcelorMittal Temirtau Anna ADOM:
ALL AGREEMENTS WITH THE MINERS ARE FULFILLED
Last December the attention of all Kazakhstani residents was focused on the situation with the miners' strike in Karaganda region. From December 11 to December 15, hundreds of ArcelorMittal Temirtau’s miners refused to leave the mines seeking a twofold increase in wages, reducing retirement age and putting forward other demands. After uneasy negotiations the miners ceased the strike and returned to the surface. What concessions the company made, what is changing in the pay system - Anna ADOM, HR Director of ArcelorMittal Temirtau, answered these and other questions in an interview with Interfax-Kazakhstan.
- Currently members of the public are closely following developments in the negotiation process between the miners and the company's top management. How is the discussion of the demands put forward by the miners during the December labor conflict? How many points of the miners' demands are met, how many are still in progress and why?
- We are in constant dialogue with the trade union organizations of our workers, including, of course, the coal staff trade union Korgau. Several meetings with the representatives of the trade union and the administration of JSC ArcelorMittal Temirtau were held. We broadly informed members of the public about the results, and now I am pleased to inform you that at the last meeting both sides agreed that all the agreements had been fulfilled.
Pay has been increased for all the workers of the underground units (engineers, workers) through a 30% tariff rate and salary rise since January 1 of this year. Tariff rates and salaries for the employees of the surface units have been raised in accordance with orders of the General Director dated January 31, 2018.
Thirteenth salary payments will be made from 2019, subject to the fulfillment of the relevant indicators based on the 2018 results and in accordance with the collective agreement. In December 2017 special payments were made to the workers of the underground and surface units in full.
On the issue of reducing the miners’ retirement age the administration of JSC ArcelorMittal Temirtau sent a letter to Kazakhstan’s First Deputy Prime Minister Askar Mamin, and a joint group with the Association of Mining and Metallurgical Enterprises was formed in order to address this issue. Trade Union Korgau is scrutinizing the issue of reducing the miners’ retirement age with the Ministry of Labor and Social Protection of the Population.
- It's no secret that the wage amount issue is in the first place for a worker . Indeed the increase in pay and tariff rates was put at the forefront during the labor conflict that occurred in December last year. Is there a big difference if we make a comparative analysis of wages and incomes of the company's employees in Kazakhstan and abroad?
- The pay amount is not the only determining factor, stability and reliability are no less important. Only all that combined allows a worker to look with confidence to the future.
It is barely suitable to compare pay and incomes in different countries. The point is that pay directly depends on labor productivity. Our production capacity is 370.9 tonnes per person but it exceeds 1,500 tonnes per person at a number of other enterprises of international companies.
So let's talk about us, about our company, and I would like to do this with facts at hand. And they are as follows: the average monthly wage at the company's enterprises in 2017 was 230, 000 tenge (330.02/$1), or 9.7% higher than the average monthly wage at the enterprises of Karaganda region’s mining and metallurgical complex and 71.5% higher than the average monthly salary across the whole region.
Last past year the company paid wages worth 92 billion tenge, or about 19.4% of the payroll fund of the entire working population of the region.
As a result of the company's performance in 2017, the contribution to the economy of Karaganda region and Kazakhstan as a whole by JSC ArcelorMittal Temirtau was: more than 31,000 of its own jobs; 40.261 billion tenge in taxes and payments to the state budget.
More than 3,500 companies registered in Karaganda region, provide services to JSC ArcelorMittal Temirtau.
About 20% of all labor income in Kazakhstan in 2017 was created thanks to the activities of ArcelorMittal Temirtau whereas a third of these incomes were wages to the company's employees.
The full contribution by the company to the country’s economy in 2017 is to be: more than 111,000 jobs in terms of indirect employment; more than 2.8 trillion tenge in general population labor incomes; about 46 billion tenge in state tax revenues.
The activity of JSC ArcelorMittal Temirtau in the country’s economy helps create additional 1.63 tenge in labor incomes of workers of other enterprises per tenge of labor income of ArcelorMittal Temirtau employees.
- It is known that the company implements a pay grading system, which causes the employees’ discontent. Why was this decision taken? What is the essence of this system? Tell us about its pros and cons.
- Actually at the moment we are implementing not a grading but salary system, which helps an employee earn more, and the company produce more quality products. I understand perfectly well that journalists do not believe one’s word, so let me give some examples for a start. So, according to the old labor pay system a cold metal cutting worker in February 2018 received 189,274 tenge. But 240,407 tenge under a new salary [scheme]. Thanks to the same system, a shift foreman from the rolled steel heat-treating shop saw his pay increased from 243,773 tenge to 297,109 tenge, and a repair engineer from the centralized technical section - from 166,043 to 186,198 tenge. This data is real figures taken from payroll statements.
The main difference between the salary system and the tariff system is that the salary is accrued for the performance of the employee's job duties, while the tariff rate for the number of hours worked. The most understandable example: there are 31 calendar days in January, 28 [days] in February, 31 days in March. Workers who worked based on salaries will receive the same salary in January, February, and March, and the workers who worked based on tariffs will see a significant decrease in February, the shortest month, and in March because of many days-off.
How is it possible to manage to achieve the increase? The answer is simple: if earlier the earnings of an employee consisted of a rather small fixed part of [pay] and a large number of various small additional payments and few employees understood the principle of formation of which (and these payments may be abolished); then for the salary system, the fixed part is increased significantly from the start and there is no possibility to cancel it, and instead of numerous and obscure bonus indicators, now each employee has clear, understandable and easily measurable individual and team objectives. The tasks are fulfilled – you get a bonus once tasks fulfilled and if tasks are over fulfilled, then a bonus amount also increases significantly. Hence the total pay increases.
To date, more than 95% of the workers in Sheet Rolling Shop no.2 have already switched to the new system, figured it out, worked on fulfilling the tasks and brought home increased pay.
The introduction of the grading system is still yet coming up and it makes no sense to be afraid of the word "grade", because in reality it's just a procedure for evaluating and ranking the positions by batches in the company depending on their value for the entity. The grade is a batch of positions that have approximately equal value for the company, where for each grade a certain salary is set or a "bracket of salaries".
The system of grades itself gives the possibility of career development within the framework of one position. For clarity, let's take an example from your business, from journalism. Surely, in the editorial offices the position "correspondent" is one of the most popular. And, surely, these positions even in one editorial office are held by several people with different experiences, with different levels of competence, with different productivity. And, surely, they should earn differently. That is, they have one and the same grade "correspondent", but the "salary brackets" are different. And if all the next "grade" positions, for example, the head of the editorial office or his deputy, are at the moment occupied, how then to reward a good employee? The only way out is to provide the possibility of "growing horizontally" within one "grade", that is, to transfer to a higher rate.
The introduction of the grading system will allow us, as a company, to maintain high competitiveness in the labor market, that is, to monitor on time which professions in the labor market could be bought over from us and to take necessary measures in advance. The grading system is used by the world's leading companies such as Tata Steel, Siemens, Metinvest, Johnson & Johnson, Lukoil, Microsoft, Toyota Motor and others.
- There is an opinion that many foreigners work in the company ArcelorMittal Temirtau, especially in the top management. Why did the need arise to involve them? It appears that the company is not interested in training and promoting local staff, and will this not lead to the fact that sooner or later the ArcelorMittal Temirtau enterprises will be left without their own experts?
- Actually there are only 45 foreign specialists at ArcelorMittal Temirtau, that is less than 1%. It should not be forgotten that anyway the JSC ArcelorMittal Temirtau is an international company, and therefore attracting foreign experts is quite logical.
In addition, ArcelorMittal Temirtau is the only ferrous metallurgy enterprise in Kazakhstan, and many professions that are critical for us are unique in their kind. And that's the problem. In case when unique expertise is required or innovative experience we have to attract foreigners. But I remind that attracted experts are obliged to train and prepare their successors from among local professionals, and, thus, local staff emerge with us. For example, in 2016, we identified 50 of the most critical professions, an analysis was carried out and employees were identified who can apply for these positions, or be in reserve, and take them up after additional training and practice.
As for training and upgrading of our Kazakh employees' qualifications then the best answer will again be the figures: JSC ArcelorMittal Temirtau invested more than 300 million tenge alone last year in the staff training and development. We trained 48,000 of the company employees and nearly 13,000 employees from contracting organizations. And let this fact not perplex you that the number of trainees exceeds the number of the company's employees. Actually, within a year, one employee can undergo several courses.
Our company has opened a branch of its corporate university in Temirtau and Karaganda for the development of not only the company employees, but residents of the whole of Karaganda region. Only 19% of the company's employees are trained at the expense of higher education establishments and colleges, 80% of vocational preparation training and training of employees takes place on the premises of JSC ArcelorMittal Temirtau.
- Nevertheless, an unalterable opinion is formed in the society that your company HR policy in Kazakhstan bears a quite aggressive character. How do you perceive this? Is it on firm ground, and in reality how are the relations between the top management and the employees of ArcelorMittal Temirtau JSC being formed up?
- Of course, we cannot agree to this assessment. ArcelorMittal Temirtau is an international company, the leader of its industry, one of the largest investors in Kazakhstan’s mining and metallurgical sector for more than 20 years. We pay much attention to the technical upgrade by introducing modern technologies aimed at improving the quality of products and their competitiveness.
I consider that ArcelorMittal Temirtau is a reliable employer. We are one of the few companies operating in Kazakhstan, which did not reduce the number of employees in 2017, but on the contrary, created 1,170 additional jobs.
Our main priorities are stable production, enhancement of our employees’ wellbeing, occupational culture and safe job. As one of the largest taxpayers in the region, JSC ArcelorMittalTemirtau additionally assumes responsibility for improving living conditions in the region and the cities in which it operates. Accordingly, we build up the HR policy on the basis of social partnership with the society, respect for the traditions of the country, in accordance with the law and corporate principles and norms generally accepted in international business.
Stable and decent pay is this is not all that the company does for employees in the cities of its presence, the company's enterprises are based in 10 cities and districts of Karaganda, Akmola, Kostanai and Mangistau regions. We are the major employer for the seven of these cities.
Annually the company takes part in projects aimed at strengthening social support for the local population, culture, sports, education, improvements to the cities and districts, care of veterans, and provides assistance for people with disabilities. The company directed more than 8 billion tenge last year at the programs of social support for the employees, members of their families and former employees of the enterprises. Social responsibility for JSC ArcelorMittal Temirtau is one of the main components of the corporate strategy.
- Thank you for the interview!
April, 2018
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