Institute for War and Peace Reporting | Giving Voice, Driving Change

Kazak Anger Over Foreign Labour

Foreign companies and their workers are increasingly unwelcome in Kazakstan.
By Eduard Poletaev
Frightened of losing their jobs and falling into poverty, Kazaks are displaying increasing hostility to foreign companies and their employees.



Local media have become obsessed with supposed economic domination of foreign companies. Articles accuse foreign companies of not honouring their contracts and infringing the rights of local citizens. Lurid headlines declare: "They Devour Our Pie" and "Foreign Employers Behave Like Landlords". One major weekly complained that foreign corporations routinely refer to Kazaks as "slaves".



The problem dates back to the mid-Nineties, when the transfer of Kazak state firms to foreign hands began. In a climate of economic stagnation, many firms were sold for a fraction of their real value. Almaty's power company, for example, was sold to a Belgian firm for only 7.2 million US dollars, despite having an estimated value of 800 million US dollars.



At the time, the authorities encouraged sales to create an investment-friendly climate. The state lacked the funds to invest in these concerns itself, while many officials benefited personally from the sales.



Laws, inevitably, were broken, while outside investors frequently ignored their obligations. Most were only interested in firms with a developed infrastructure that offered a quick return. The usual practice was to cut staff numbers and raise prices, securing an instant profit.



Many new investors exported their capital illegally. One British group of investors in the Irtysh Copper Smelting Plant disappeared after selling off the firm's materials, stock and equipment.



Local officials and businessmen, meanwhile, became jealous of the foreigners' big profits, ruing their naivete in selling off enterprises so cheaply. The former premier Akejan Kajegeldin paid with his job, when he was ousted in 1997 for committing "economic crimes".



Pressure was applied to foreign investors in the form of checks and fines. But little changed at ground level. Prices remained just as high, even though the previous owners had been stigmatised as "robbers".



Only the small-fry faced this pressure, in any case. Large multi-nationals, such as those developing Kazakstan's oil fields, enjoyed direct access to the authorities. Nobody wanted to quarrel with major investors, and legislation guarantees them preferential conditions.



"While the key posts are held by their own people [foreigners], most companies have a representative from the indigenous population holding the position of vice-president or executive director," said Ruslan Kasymjanov, a Kazak political scientist. "His job is to make sure the interests of foreign companies and the bureaucracy do not clash."



In spite of this tactic, tension over the influx of foreign workers has escalated. "They are trying to instil the idea that we are incapable of carrying out certain operations," said Alexandr Mayuchi, a high-ranking regional official in the west Kazakstan region.



Nurlan Baikenov, manager of a major Kazak company, agrees. "It's a conscious policy. Foreigners deliberately bring in their people, and condemn ours to unemployment," he said.



Regulations stipulate that contractors must give preference to local personnel. In reality, foreigners by-pass Kazak professionals and even bring in foreign unskilled personnel. Conflict is sharpest in the Atyrau region, the oil centre, where most foreign specialists are engaged, and where there are continual conflicts between foreign and local workers, exacerbated by the high unemployment level.



Serikbek Daukeev, governor of the region, says the gulf between rich and poor has widened. "At a time when every second person in the district is unemployed, those foreigners have taken our jobs," he said.



In one notorious case, publicised in the local press, a Turkish foreman repeatedly stabbed a Kazak worker because the latter did not understand Turkish. A case was filed against the foreman and he is facing imprisonment. Legal action, however, applies only to rank-and-file foreigners.



Language is a big source of aggravation. Bakhytbek Kenesbaev, a professional oilman, says lack of English has rendered him unemployable. "I am Kazak," he said, "but nobody wants to speak my native language to me."



Foreign companies insist they must employ workers with international certificates and experience. The results, however, are often shoddy. Turkish workers come to Kazakstan in thousands to work on sites in Astana, the new capital, and on other major construction projects. But many Turkish-built constructions fail to withstand the winds and the frosts of the steppe. Their facades quickly crumble and the insulation is poor. Many people have also died working on the building sites owing to poor safety and environmental standards.



Despite complaints about poor quality, Turkish construction companies win many tenders. Local companies struggling to compete rarely succeed. Unlike the Turkish companies, their managers are inexperienced lobbyists.



"I get three times as much money here as in Turkey, so there's no reason for me to leave Kazakstan," said Jelal Kadyr, an electrician from Istanbul. Every 90 days he pays 210 US dollars to the authorities to renew his visa. For one-fifth of his salary he also hires two local unemployed men to work in his place.



Of course, those Kazak's fortunate to work for international companies do not necessarily share the hostility against foreigners. Andrei Srutovskiy, a local Russian employed as a department head by Philip Morris receives more than 600 US dollars a month. "My salary is 30 times more than the minimum wage. No local company would have been able to offer me that," he said.



Even low-level workers at foreign companies are well compensated. Irina Starojilova, a cleaner also at Philip Morris, said she gets $200 a month, plus free lunch and other social services, including a nursery for her son. "There is no animosity against foreigners in our company," she said.



Bayan Maskhutov, a labour ministry spokesman, says the government intends to limit the number of work permits issued in order to reduce the number of foreign workers. The contracts contain a get-out clause, which says the work must be carried out consistent with European standards, which local companies cannot meet.



Every week city and regional governors demand licenses for more and more foreign workers because their own workers fall short of the standards required. Many Turkish construction workers, as well as unskilled workers from China, the Philippines and from other parts of the world, also slip in on tourist visas.



The total number of foreign specialists in the country is expected to reach approximately 50,000 by the end of the year. Local lawyers complain that the main production sharing agreement signed between the government and the Alliance of Foreign Investors has tipped the balance too far in the interests of the non-nationals. Dissatisfaction looks likely to grow. But their influence over the authorities is so great that the investors seem destined to carry on regardless.



Eduard Poletaev is a regular IWPR contributor.