One of the aspects that genuinely surprised me about the recent visit to Russia organised by Renault and AvtoVAZ was the almost complete absence of trade union antagonism to restructuring.
Perhaps I had assumed organised labour and a propensity to strike would have featured majorly in a post-Communist world, leaning heavily on a socialist vision of union representation, but it was actually quite the opposite.
Go deeper with GlobalData
It seems although Russia has obvious links to the far left in its history, this has relatively little to do with what traditional socialist-leaning unions in the West, such as the Confederation General du Travail (CGT) in France and the Federazione Impiegati Operai Metallurgici (FIOM), in Italy, might imagine are classic responses to the great euphemism of ‘rationalising.’
For that of course, read downsizing and the Russian auto industry has undergone its own seismic rationalising of late as the country struggles to adapt to both modern manufacturing ways and extraordinarily challenging economic conditions – engendered in no little part and through no fault of its own – by the political machinations between Moscow and the West surrounding the Ukrainian crisis.
A reliable source in Russia tells me the reluctance to withdraw labour for example – a right cherished by employees – if not by management – in the West as the ultimate expression of worker dissatisfaction – has much to do with the historical baggage associated with trade unionism East of the Urals.
Despite almost being the very echo of Communist ideals the concept of trade unionism appeared to be all very well as long as members toed the – very – Party – line and certainly did not walk out on strike. Those who do today seem very much the exception to the rule.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataAround 135m people – a number Western labour can only dream of for one country – were apparently organised around 30 trade-led bodies and just about represented every form of worker apart from those on collective farms thought to number up to five million people.
As the Communist Party governed on behalf of the people unions seemed to be absorbed into a Statist view of life that Moscow knew best – allowing unions to organise social welfare issues appeared – and still does to a certain extent – the parameter to which they could go but not much further.
They certainly did not exhibit the independent – and often stubbornly frustrating tendencies – of their freer counterparts in the West and that legacy seems to have remained to a large part today.
It also appears some of those brave enough to speak up and strike were subject to a level of violence, presumably leaving many with a deep disinclination to down tools and walk out.
I talked to Renault Russia general director, Bruno Ancelin, in Moscow about organised labour and as a Frenchman, he told me he was taken aback by the lack of enthusiasm towards trade unions by workers at the Avtoframos plant in the heart of Moscow.
“When I arrived I was heavily surprised,” said Ancelin. “The weight of the trade unions is very important [in France and UK for example].
“The weight of the trade unions is not very important in Renault Russia. People are used to skip between one company and another – they give no importance to the power of a union. I did not destroy the trade unions of Renault Russia.”
However, the Renault director conceded compared to France, the power of the union at the Avtoframos plant was “frankly speaking…nothing,” although he was at pains to point out the automaker conducted its corporate culture at standards similar to his home country and provided reasonable wages.
But Renault’s Moscow operation – impressive as it is – pales in comparison to partner – and Lada-producing – AvtoVAZ some 520 miles to the South-East where its sprawling 675 hectare site is currently undergoing its own downsizing in response to market trends.
Renault, along with alliance partner Nissan, now controls 50.1% of AvtoVAZ, but it seems pretty certain even without the Paris-Yokohama axis, the newly installed CEO Bo Andersson, fresh from his stint at fellow-Russian automaker GAZ Group, would have enacted his bold restructuring plan anyway.
The numbers were immense even well before Andersson’s arrival. From a peak of around 109,000 staff in only 2009 AvtoVAZ is embarking on a pruning exercise which would leave those in the West – particularly unions – aghast.
Those 109,000 workers will shrink by half to 53,000 by the end of this year while further axing could see the numbers dwindle to just 30,000 by the end of this decade.
That’s 79,000 employees made redundant in the space of 11 years or an average attrition rate of more than 7,000 per year, every year.
In fairness to AvtoVAZ, the company put up its union president, Alexander Zaitsev, to talk about restructuring on such a colossal scale, but he seemed remarkably emollient, only hinting at the nervousness with which his labour body views the reshuffling of the auto pack.
“With Mr Andersson coming to work as president of AvtoVAZ, we were a little bit concerned,” was as far as Zaitsev would venture, preferring to concentrate on reaching a collective agreement with the Swedish chief that “will remain in force and be fulfilled.”
Such acquiescence would be regarded as breathtaking in the CGT or FIOM – admittedly quite hot-headed unionists as opposed to some of their more pragmatic cousins such as the CFE-CGC or FIM – but even so the historical legacy of the Soviet Union seems to loom large in contrast to the West.
When PSA Peugeot-Citroen announced its intention to shutter its Aulnay plant near Paris with the loss of up to 8,000 jobs, the howls of protest set in motion a well-worn cycle of organised industrial action, led as ever, by the hyper-active CGT.
The industrial protests were fronted on the media to a large extent by union delegate, Jean-Pierre Mercier, with a four-month strike estimated to have cost production of 40,000 cars.
Mercier’s vocabulary could be straight from the hard left manual and stands in stark contrast to Zaitsev in Russia.
“The only way to protect against redundancy…is to struggle collectively,” he thundered earlier this year.
“We have informed the workers we are in the middle of [a] struggle…that the State stops redundancies and says to PSA to stop redundancies.”
From my short experience of Russian unions, there seems little or no appetite for any such colourful action, let alone language on the scale employed in France.
Again, back at AvtoVAZ, its VP human resources and social policy, Dmitry Mikhalenko, insisted there was no desire to withdraw labour in protest at the job cuts.
“Strikes – we don’t have strikes,” he told a group of us at the Togliatti plant, with a French member wryly noting: ‘We are specialists at that [strikes].’
Mikhalenko continued: “There were different kinds of actions in 2009 – some people went in the streets protesting. We worked out all the issues to solve the situation people have.”
And perhaps here’s the rub as he added: “In principle, Russian people are not striking.”
When Andersson was at GAZ at one of his meetings with union officials – to be fair to the CEO he always included labour bodies then and still does in his morning updates – what was of concern was “toilets, health care, food.”
These were problems deemed eminently fixable by the boss and which seemed higher on the union agenda than any industrial action.
“Russian legacy was massive over-employment especially in the Mono cities like Togliatti,” says my Russian source. “In some cases, there were as many, if not more, ‘management’ people than in the production line.
“Lots of single line reporting structures. Flattening of the organisation combined with use of more modern production techniques yields a lot less people required.
“Bo is not going to take prisoners to make AvtoVaz profitable and proud. He is a brave man with a pretty clear understanding of how the industry needs to work.”
Such massive restructuring will take all the Russian phlegmatic co-operation so far demonstrated by the AvtoVAZ union, but a glimpse at other post-Soviet societies such as the former East Germany shows the medicine is painful and prolonged.
There is a certain irony in the Togliatti plant being named after the Italian communist leader of the 1920s, with that country’s tradition of militant industrial action, but this is Russia and Russia does things its own way.
Related Company Profiles
Renault SA
AvtoVAZ