Azeri Oil Wealth Doesn't Spread to Workers

“Everyone says that since we’re oil workers, everything must be great for us, but that isn’t how it is,” Naiba Mehdiyeva said.

Mehdiyeva’s husband is an Azerbaijani oilman, part of an industry that generates massive revenues for this small state.

But those at the sharp end of getting oil and gas out of the ground see little of that wealth.

The Mehdiyev family live like many others, in a communal hostel on the outskirts of Azerbaijan’s capital Baku. They have curtained off half the room to give their adult daughter some space of her own.

“Who would want to marry someone from a hostel?” Mehdiyeva asked.

They are among 104 oil workers’ families in this hostel, located in Bakikhanov on the fringes of Baku.

Each family is assigned one room regardless of the number of people. The rooms are cramped and full of furniture, making it hard to move around.

Seven members of Abbas Shirinov’s family occupy one of these rooms.

Shirinov has been an oil worker since 1988, and now earns 400 manats a month, about 500 US dollars. He is one of many waiting for housing promised by the state oil company, known as SOCAR.

“I’ve been in the housing queue for a long time. I wrote to SOCAR, but their response was to suggest I buy a flat in a cooperative. I can barely cover my family’s outgoings on this pittance of a wage, so how can I join a cooperative? It’s insulting.”

The scale of Azerbaijan’s oil and gas revenues mean that paying for major infrastructure projects is not really a problem. Profits from the industry go into the State Oil Fund, which aims to share the money between present and future generations. Just over half the 65 billion dollars that have flowed into the fund have been spent. But the workers who generated the income say they are last on the list of beneficiaries.

“Azerbaijan is seeing development for some, but not for the oil workers, even though the entire economy depends on oil,” Alovsat Gurbanov, who has worked in the industry for 27 years, said. “We oil workers live in terrible conditions. Many of us live in hostels.”

Gurbanov recalled, “When I started working as an oilman, it was still under Soviet rule. They valued workers then, especially oil workers. I got 400-500 roubles [a month] then, and you could live amazingly well on that money. If the USSR hadn’t fallen apart, I would have got a three or four room apartment long ago.”

Mirvari Gahramanli, head of the Committee for the Protection of Oil Workers’ Rights, said, “The Azerbaijani oil worker is the destitute son of a millionaire father.”

“They [workers] produce the oil and shoulder the burden of this difficult work, yet their salaries are miserable and their working conditions poor,” Gahramanli said, adding that SOCAR had an obligation to provide its workers with housing under the terms of their employment contracts.

SOCAR says it is well on the way to providing purpose-built subsidised housing. Company spokesman Niyameddin Guliyev said some of the housing units were complete and just needed the final touches before people moved in over the first half of 2012.

“Oil workers who are in the queue can buy these flats – they will pay half the price, and the rest will come from SOCAR,” Guliyev said.

As of the beginning of this year, there were over 6,200 SOCAR staff on the waiting list, 5,700 of them in Baku.

Ilham Shaban, head of the Centre for Oil Studies, a research organisation in Baku, argues that the only way SOCAR can improve pay and conditions is by cutting its overall staff numbers, currently standing at 79,000.

“In the West, they say it takes 1,000 workers to produce a million tons of oil. It follows that Azerbaijan should have 10,000 workers for [SOCAR annual production of] seven million tonnes,” he said. “There are many superfluous employees on SOCAR’s books… the average salary in the company is 600 manats, but if staff numbers were cut to 10,000, then average wages could rise to 1,600 manats, and the standard of living of oil workers would improve.”

Nancy Talibova is a freelance journalist in Azerbaijan.