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

Mounting Discontent Among Kazak Oil Workers

Strike action prevented after concerted protests, as income levels fall in oil industry.
By Yaroslava Naumenko

When employees of Kazakstan’s oil industry are prepared to go on strike over wages, it is a sure sign that all is not well in a workforce that is among the best-paid in the country.

Staff at EmbaMunaiGaz, a division of the oil and gas conglomerate KazMunaiGaz based in the western region of Atyrau, threatened to go on strike last month after management announced the scrapping of a regional weighting payment. Over 1,000 workers put their names to a letter on May 14 calling for the payment to be maintained.

The abolition of the benefit was a significant blow to oilmen, since workers earn an additional 70 per cent of their basic wage to compensate for the hot climate of western Kazakstan and also the occupational hazards of working in the oil industry. The payment is a legacy of the Soviet Union, but is not mandatory under current Kazakstan labour law.

After failing to reach agreement, the EmbaMunaiGaz workers announced a walkout for June 11.

They called off their strike action on June 4 after the parent company KazMunaiGaz Exploration and Production promised to increase basic wage levels to offset the loss of the regional weighting.

In March, staff at another KazMunaiGaz production division, OzenMunaiGaz, based in the neighbouring Mangystau region, mounted a major strike that lasted three weeks and involved several thousand workers. They were protesting because they too had been told their regional weighting was to be cut.

The KazMunaigaz EP statement of June 4 said the agreement followed negotiations with recognised trade unions.

However, in both cases, the protest actions were mounted not by unions, but by self-organised groups. The Atyrau workers, for example, signed their open letter in the name of an “initiative group to create an independent trade union”, and said in a later statement that they had no confident in established unions and wanted KazMunaiGaz to deal with them.

A KazMunaiGaz official who did not want to be named said he had not been aware of any plans for a strike at EmbaMunaiGaz, and had not seen the list of demands made by what he described as “six people in an apartment”.

“They claim to have sent a letter to the government and the president, yet no one has seen it and no one knows about it,” he said.

The KazMunaiGaz statement made it clear the pay increase extended to both divisions, in Atyrau as well as Mangystau.

Max Bokaev, a member of the team representing more EmbaMunaiGaz workers, said he wanted their lawyers to go through the fine print of the deal,

“KazMunaiGaz EP can make big promises, but when it comes to what they really mean, it could be that there’s no pay increase.”

Analysts say the concerns raised by oil workers reflect the growing hardship affecting western Kazakstan, even though it is home to the country’s most lucrative industry.

Galina Nakhmanovich, an economist at the Almaty-based Institute for Political Solutions told IWPR that oil sector workers’s living standards have been falling for some time.

“Last year our institute conducted social research in Janaozen [Mangystau region]… which showed the workers’ circumstances are far removed from the image people have if they’re not involved in the oil industry,” she said. “Average wages in oil production field are certainly higher than in other sectors, but the reality is that life is hard for the average worker. Working conditions are tough, the incidence of occupational illness is high, as is the risk of injury.”

Nakhmanovich said wages were falling in real terms, because bonus payments accounted for a high proportion of take-home pay, and these were now falling.

“When oil prices were rising, the company was able to pay out bonuses on a regular basis. The oil price has since gone down sharply, so this income component has been greatly reduced, ” she explained.

Nakhmanovich said workers living in isolated settlements near oil fields paid higher-than-average prices for foodstuffs and consumer goods, which had to be trucked in.

Finally, many households have been hard hit by the tightening of credit terms in Kazakstan, a consequence of the global financial crisis impacting Kazakstan’s banking system. She noted that when loans were still freely available a couple of years ago, the oil town Janaozen accounted for a higher percentage of personal loans per capita than the rest of Mangystau region.

Dmitry Verkhoturov, an analyst at the Central Asian Development Institute, agreed that the discontent displayed by oil workers reflected a worsening situation in this part of the country.

He believes the Kazak government was wrong not to intervene in the recent labour disputes to try to avert strike action.

Failing to address the oilmen’s concerns promptly, ignoring them, or refusing to recognise their action as legitimate, would all be a mistake and would merely fuel their anger, he said.

“If you allow people to express themselves and articulate their demands, then an escalating conflict will gradually fade away,” he said.

According to Nakhmanovich, the oil workers are vital to the economy and should be treated accordingly.

“These people’s work generates the lion’s share of revenue for the government budget, and they deserve to have attention paid to their situation,” she said.

Yaroslava Naumenko is a journalist in Kazakstan.

This article was produced jointly under two IWPR projects: Building Central Asian Human Rights Protection & Education Through the Media, funded by the European Commission; and the Human Rights Reporting, Confidence Building and Conflict Information Programme, funded by the Foreign Ministry of Norway.

The contents of this article are the sole responsibility of IWPR and can in no way be taken to reflect the views of either the European Union or the Foreign Ministry of Norway.