Azerbaijan: Famous Victory for Striking Oil Workers

Azeri oil industry employees secure substantial pay rise following mass industrial action.

Azerbaijan: Famous Victory for Striking Oil Workers

Azeri oil industry employees secure substantial pay rise following mass industrial action.

Saturday, 5 November, 2005
The largest strike in Azerbaijani history last week resulted in a resounding victory for the workers, after officials at US oil-services giant McDermott agreed to local employees’ demands for a pay-rise and improved working conditions.

Around 1,500 workers at the company’s construction yards 20 kilometres south of the capital Baku walked out on November 22, bringing all activity to a halt.

Although the action only lasted one day, strike leaders said they would stage another stoppage if their demands were not met.

McDermott officials, together with representatives from the Azerbaijani state oil company SOCAR, made an offer, which the strikers rejected. One week later, on November 28, employees again walked out.

In an agreement reached late the following day, company officials agreed to give their Azerbaijani workers a 20 per cent pay increase, effective December 1, and then a further 12 per cent rise January 1. Employees will receive another bonus, equal to one month’s pay, on completion of the company’s main project currently under construction.

It was the first mass strike since Azerbaijan achieved independence after the breakup of the Soviet Union in 1991, and the first action taken against one of the foreign multinationals that have come to the country to develop its massive oil deposits.

McDermott Caspian Contractors Inc, MCCI - the local subsidiary of Houston-based J Ray McDermott - builds offshore platforms and pipelines for Azerbaijan’s largest oil development project, the BP-led Azerbaijan International Operating Company consortium.

The strike reflected growing economic and political dissatisfaction within the former Soviet republic. Police brutally beat thousands of demonstrators, including women and children, when breaking up an anti-government rally on the weekend of November 26-27.

Protesters were demanding a re-run of parliamentary elections that took place at the beginning of the month, which international observers said were riddled with fraud and resulted in an overwhelming victory for pro-government forces.

The McDermott strike ended without any incident, however.

On the surface, the strike revolved around the issue of low salaries. Many projects McDermott is currently fulfilling will soon reach completion and officials are correspondingly reducing work hours.

But company employees said that the reductions could result in as much as a 50 per cent drop in earnings for many, and demanded a 15-20 per cent pay rise instead.

Additional demands indicated, however, that worker dissatisfaction was much broader, and cut to the heart of growing economic inequalities in Azerbaijan’s oil-fueled economic boom.

Workers demanded health insurance, better work conditions and the right to unionise.

Most importantly, strike organisers protested what they said was workplace discrimination.

Mirvari Gahramanli, chairwoman of the Committee for the Protection of Oil Workers' Rights, a Baku-based non-profit organisation, said that McDermott regularly hired foreign nationals when there was a sufficient pool of qualified Azerbaijani specialists who were capable of doing the same job.

Furthermore, said Gahramanli, the foreign specialists sometimes received much higher pay than their Azerbaijani counterparts.

"For example, a foreign rigger at [the McDermott plant] receives a monthly salary from 5,000 to 6,000 US dollars, while Azerbaijani workers are being paid ten times less that amount for the same work,” she said.

Many Azeri workers told IWPR that they receive 300 to 350 dollars per month.

At the beginning of November, McDermott’s 500 foreign labourers were granted a 17.5 per cent pay rise, prompting the 1,600 Azerbaijani workers to demand a corresponding increase.

Jahangir Aliev, head of the Azerbaijani Oil and Gas Workers Trade Unions Committee, agrees that the foreign workers are creating tensions in the oil industry workplace.

"This should end,” said Aliev. “There are sufficient numbers of professional local workers in Azerbaijan who are able to replace foreign workers."

In a written response to IWPR, MCCI officials said that since summer 2003, the company has undertaken a number of initiatives to replace foreign workers with locals “while keeping the high quality and safety standards [McDermott] adheres to worldwide”.

The company also provides accident insurance to “all Azerbaijani personnel in accordance with requirements of the Labor Code of Azerbaijan”, as well as access free-of-charge to all McDermott’s onsite medical facilities and personnel “irrespective of nationality”.

In addition, MCCI officials say they provide free food and transport for their workers on the job, and training to raise their qualifications.

Other observers point out that Azerbaijani government officials themselves were part of the negotiations that helped determine local workers’ salaries, which are higher than the amounts received at the state oil company.

In addition to the pay rise, McDermott officials also agreed to set up working groups to look into the workers’ other concerns. In total, strikers’ demands comprised 14 points.

AIOC spokesperson Tamam Bayatly told IWPR that although the second strike lasted two days, consortium officials hoped the work stoppage would have no impact on their overall schedule.

Speaking before the strike was settled, Bayatly said, "MCCI is building a part of the platform for drilling in the eastern part of the Azeri field (a reference to the third oilfield the BP-led consortium is developing).

“This platform is to be towed to the boring site only in 2007. We hope that the situation at the plant will settle soon, which will have no impact on our activities."

Meanwhile, more than 1,000 employees at BOS Shelf, a contractor that also works for AIOC, are demanding a 20 per cent pay increase and are threatening to strike if their demands are not met.

Trade union head Aliev said that similar actions to the McDermott strike should be expected in the future, as the entire industry suffers from the same problems.

"Further strikes are highly likely if the problems are not resolved," said Aliev.

Rufat Abbasov is a journalist working in Baku.
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