ArcelorMittal Temirtau cuts wages by 25% for locals and by 50% for foreigners

ArcelorMittal Temirtau has temporarily reduced the wages of foreign employees by 50 percent and of local personnel by 25 percent, Tengrinews reports citing the press service of the company. 

The workers of the company learned about this from a decree signed by Vijay Mahadevan, General Director of ArcelorMittal Temirtau.

ArcelorMittal Temirtau is a steel giant based in central Kazakhstan that belongs to Indian-owned multinational steel maker ArcelorMittal.

The company explained the wages cuts with the complexity of the geopolitical situation, the overall slowdown of the region’s economic growth and the unfavorable situation at the foreign markets. This all led to a complicated financial situation within the company along with a shortage of cash on the company's accounts, they said. 

Amid this situation, the company had to temporarily cut the personnel’s wages. “Foreign specialists will receive 50 percent of their wages. Employees of steel and coal departments of ArcelorMittal, Orken and Kurylysmet will get at least 75 percent of their wages for January 2015. The remaining part of the salaries will be transferred to the accounts of the employees after ArcelorMittal has more cash. The company also decided to postpone the planned increase in the tariff rates and adjustment of salaries of the company's employees to the inflation rate. The commitment to adjust the salaries to the inflation rate in accordance with the collective agreement will be fulfilled when the financial situation gets better and the company receives some cash,” the company’s statement said.

According to the company's Director for Human Resources and Labor Relations Dmitry Pavlov, the difficulties with sales at foreign markets were mostly related to devaluation of the Russian ruble, which made products of ArcelorMittal uncompetitive at the Russian market that is one of the main outlet markets of the company. Because of the depreciation of the ruble the cost of the Kazakh steel became significantly higher in comparison with that of Russian steel.

Besides issuing the wages cutting decree the company applied to the Kazakh government asking to speed up the tax refund. “The company has asked the Kazakhstan government to return the 12 billion tenge ($65 million) of VAT payments that the state owes to the company since 2010," ArcelorMittal Temirtau said. The company explicitly declared that once the government made the refund the company would be able to resolve the salaries issues.

"Trade union committees of metallurgists and miners are aware of the current situation in the company and have promised to help resolve the (refund) problem,” the company said.

In the meanwhile, Kazakhstan's Trade Union of Workers of Mining and Metallurgical Industries questioned the legitimacy of the wages cuts and applied to the prosecutor. "The January 21 decree of this year has been canceled. The decree involved cancelling the salaries' adjustment to the inflation rate and 25-50 percent wage cuts. The decree was issued without the trade union's consent. It was canceled unilaterally. So today, our trade union appeals to prosecutor's office to challenge the decision because it deals with the clauses of our of collective employment agreements, " head of the trade union Assylbek Nuralin said. 

In response to the trade union's appeal, the Labor Inspection of Karaganda Oblast (where Temirtau city belongs) started a check into the activities of ArcelorMittal Temirtau. "We have authorised the check. And we will be supervising its course," the region's prosecutor's office said. The check is called to determine the legitimacy of the company's action. "If the company's actions are found to be in breach of the laws steps will be taken to restore the employees in their rights," the prosecutor's office promised.  

Kazakhstan's Minister of Healthcare and Social Development Tamara Duisenova commented the situation by saying: "Labor relations are regulated by labor contracts entered into by and between the employer and the employee. The contract specifies the wages rate and the employee is obliged to fully and timely pay the wages. If an employer wants to introduce any changes in a contract it is supposed to notify the employee one month prior to the date. Kazakhstan's Labor Code clearly specifies that an employer may not adopt any acts that undermine labor standards." 

Speaking about the checks launched by the prosecutors she said: "Together with labor inspectors they have started the checks. We want to understand what the labor contracts said. After that we can decided whether the employer acted rightfully."

If ArcelorMittal is found to act in violation of the law, but nonetheless reduces the wages of its employees, then the government will intervene to protect its citizens. In that case, Kazakhstan may deprive the company of all the state benefits. Kazakhstan’s Deputy Prime Minister Berdybek Saparbayev spoke about it during his working visit to Karaganda (a Kazakh city near Temirtau). “We will going to take measures. The state has always cooperated with ArcelorMittal Temirtau company and provided its full support in terms of state benefits. The company should also cooperate with the state, especially in regards to its employees. Now the company is saying that it is not going to sign any memorandums on social support to the region. It this case we will raise the question of cancelling all the benefits that the company receives from the state,” Berdybek Saparbayev said.

ArcelorMittal Temirtau operates as a subsidiary of Arcelor Mittal in Kazakhstan.

The steel plant in Temirtau city in central Kazakhstan launched in 1960 became part of ArcelorMittal, the world's largest steel producer, in 1995.  It was first known as Mittal Steel Temirtau and changed its name to ArcelorMittal Temirtau in September 2007. It is now the leader of Kazakhstan’s steel and mining sectors. ArcelorMittal Temirtau includes a metallurgy plant in Temirtau, 8 coal mines in Karaganda Oblast and 4 iron ore mines in Karaganda, Akmola and Kostanay Oblasts in Kazakhstan. 

The integrated steel plant located in Temirtau is capable of producing 4 million tons of crude steel annually. Among the plant's products are hot and cold rolled steel, tin plates, galvanized steel and polymer-coated coils, welded pipes, coke and chemical by-products. ArcelorMittal Temirtau produces and sells longitudinal welded tubes and pipes for the mechanical industry, and water and gas distribution applications primarily in Kazakhstan. It also exports its pipes and tubes to the neighbouring post soviet countries.

Writing by Assel Satubaldina, editing by Tatyana Kuzmina