News brief: ArcelorMittal cancels pay cuts

Kazakhstan’s largest steelmaker has ended severe pay cuts that it had blamed on a weak global market for its products, according to news reports.  The incident may illustrate political pressures on foreign-owned firms here.

Trade unions had called for the government to investigate the legality of ArcelorMittal’s wage decreases to nearly 30,000 miners and metallurgists in Kazakhstan, announced in late January.  Officials of the Karaganda oblast (similar to a state in the US) said they had detected illegal pay cuts, according to the business weekly Panorama.  The firm’s Temirtau plant is the largest steel mill in Central Asia.

Foreign specialists at ArcelorMittal Temirtau faced a slash of 50%; domestic specialists, 25%.  The Indian-owned company said these reductions were temporary and were due to a lack of cash as well as to its “complicated situation” in sales, Panorama reported.  The main “complication” seems to be the fall since mid-2014 in resource prices; ArcelorMittal said it could no longer cover unit costs.  Weakening of the ruble since last summer had also reduced Russian demand for its steel, the firm said.

Monopsonies galore

Trade unions retorted that they had not agreed to the wage cuts and that ArcelorMittal should complete a pact-in-progress with them and with involved agencies.  This pact was agreed about two weeks ago, under pressure from oblast officials.  It was not clear from news reports whether ArcelorMittal would cancel the cuts in pay to foreign workers as well as those to domestic ones.

The steelmaker asserts that it has overpaid value-added taxes by 12 billion tenge (about $65 million) since 2010 and that repayment would help alleviate the need for wage reductions.  So far, the Kazakhstani government has agreed to refund at least 4.1 billion tenge, reported Tengrinews.               

In 2006, coal miners in the Karaganda region struck against ArcelorMittal for several weeks over pay and work conditions.  It narrowly avoided another strike in 2012 by raising wages to steel and coal workers by about a tenth, backdated six months.

Factory towns in Kazakhstan are often dominated by a single employer – a Soviet legacy.  Sans political interventions, the employer may be able to dominate the labor market more than is possible in a competitive, non-Soviet setting.  –Leon Taylor tayloralmaty@gmail.com

References

Panorama.  Profsouzi osporyly zakonnost’ snyzhenye zarplat v ‘ArcelorMittal’.  [Trade unions questioned the legality of pay reductions at ArcelorMittal.]  February 6, 2015.

Assel Saltubaldina.  ArcelorMittal Temirtau asks workers to yield to wage cuts.  Tengrinews.  February 9, 2015.  Online. 

Assel Saltubaldina.  ArcelorMittal Temirtau employees to receive full salary.  Tengrinews.  February 11, 2015.  Online.  

Assel Saltubaldina.  Kazakhstan to return 4.1 billion tenge of VAT payments to ArcelorMittal Temirtau.  Tengrinews.  February 13, 2015.  Online.  

Dmitry Solovyov.  ArcelorMittal agrees pay deal with Kazakh workers.  Reuters.  July 17, 2012.  Online.