EXECUTIVE SUMMARY- MASS REDUNDANCY SYSTEM FOR RUSSIA-

BY KENNETH J.F.JOHNSON, M.ED. CONSULTANT 

JANUARY 30, 1993

 

 

INTRODUCTION:

 

The Russian Federal Employment Service in its effort to prepare the Russian people for the move to a market economy, has been developing a system which will permit the local enterprise, the affected employees, and their community to develop their own strategy to adjust effectively to mass layoffs. The principle is to empower the people directly impacted by down sizing to identify their own strategy, to assist in developing programs and services which they feel are appropriate to get them back into employment. The model of choice is based on the Canadian Industrial Adjustment Service committee structure for handling company closures or major down sizing.

 

In the Canadian model when an industry announces a closure an Employment and Immigration consultant approaches the company and its workers to explain the concept of their forming a joint consultative group, to develop their own strategy to assist the effected employees. The advantage of this approach is that it creates the opportunity for the people directly effected by the closure to set their own priorities for government assistance. This avoids the difficulties of governments responding with programs that may be inappropriate to meet the local needs.

 

A variation of this model has been developed for the Russian situation considering the specific needs of a centralized government driven economy which had full employment , moving to a private sector economy driven by the market and requiring mass lay offs in order to increase productivity and efficiency. The intent in the Russian application will be to involve the company, union or workers representatives, local authorities, local soviet, and various community resources including the Employment service, vocational or technical school representatives and financial and legal supports. This group of representatives will become the Early Response Team (ERT) with the task of identifying the employee needs and developing the strategy which will best address the effective adjustment of the employees once they are faced with a lay off. The ERT will make recommendations to the various levels of government and the company regarding the programs and services the employees have requested. This will allow governments to respond more efficiently to the needs in a given situation and target their available resources most effectively.

 

THE SITUATION:

 

The rapid shift to a market economy created the opportunity to pilot an Early Response Team in the town of Laekens in the Region of Vladimir. The city of Vladimir is an industrial city of 450,000 people, which has an economy representative of the Russian military industrial complex. Their are large machine tool, military equipment manufacturing, chemical, tractor manufacturing, textile and food processing facilities operating in the city and area. A total of 212 plants ranging from 3,000 to 18,000 employees in size are facing restructuring for a market economy which may result in the lay off of as much as a third of a companies work force. The intent is to try to establish an ERT in such an area, to test the concept in a locale which is representative of a typical Russian industrial centre.

 

The town of Laekens represented a small single industry town in the region which is dependent on their textile plant for employment and the communities tax base. The town has a population of 11,000 and the plant has a workforce of 4,200 loom operators and spinning machine operators and support staff. Every family in town has someone working at this plant. The plant manufactures cotton material and thread at a first level of production. This production is then shipped to 7 other plants in the surrounding region for further processing and finishing. Approximately 20,000 employees in the Vladimir region are affected directly by the operation of this facility. Privatization is expected to eliminate 1,500 jobs from this facility as it strives to be competitive in a market driven economy.

 

The Laekens Textile Plant is an operation typical of many in Russia in that they have 700 employees identified as scientists and engineers, that are effectively non-productive personnel. Many of these white collar jobs are expected to disappear as unreasonable overhead costs with restructuring; along with the many simple manual jobs held by employees who may have a history of difficulties in being productive. The difficulties identified include health related and alcohol related work problems. Together these groups will make up the almost 1,500 employees who will lose their jobs in the next year under the privatization initiative. Consequently this enterprise provided a reasonable opportunity to test the ERT approach in developing a strategy to assist the employees in adjusting effectively to their loss of job.

 

One other variable that is effecting this plant is the difficulty in acquiring raw cotton materials for regular production because their traditional suppliers in Azerbaijan are no longer part of Russia . The Azerbaijanis insist on payment prior to shipping and this has been a difficulty for the enterprise because of a poor central banking system and a historically closed market system. This has caused the facility to experience partial shutdowns as they struggle to get materials for production and finance their efforts. The result of this activity is that it has created the sense of urgency that often motivates a committee to develop effective action to survive. They recognize that they cannot afford to pay employees 2/3 rds. of their pay while they sit at home because that will inevitably lead to the demise of the plant.

 

 

 

 

ACTION:

 

A visit was made to Vladimir in December 1992 to meet with the Oblast (Regional Employment Centre) director and her staff to discuss the potential for setting up an ERT. Three Federal employment Service consultants accompanied myself as resources to the region and to develop some federal expertise in the consultation process. A decision was made to approach the company and their workers with the consultative model as a method for them to deal with their current situation and the anticipated mass redundancy to come.

 

Over a period of three days I met with representatives of the company, union, local authority, soviet rep., and vocational and technical training reps.,to explain the Early Response Team approach. For the next six days the group formed a committee, selected a chairperson who was the companies 2nd in command and a former town administrator and established five sub-committees.

 

The sub-committees included Communications, Employment/Human Resources, Finance, Social Action Centre, and Productivity Improvement & New Product Development. During the six days the coordinating committee helped to clarify goals and led each sub-committee through the exercise of setting short term objectives and identifying action to be carried out. All activity throughout this process was on a voluntary basis with the company donating time and the various agency personnel involved at the cost of the agency they represented. This included significant involvement by Regional and local Employment Centre staff; Vocational college staff and the technical school rep.; as well as the local authority and the soviet. The commitment level of people was very high as they were seriously concerned about the survival of their community.

 

Objectives for each sub-committee were:

1) Communications:- Inform employees of the committees existence through a news letter and posting of minutes.

- Survey the employees regarding their concerns, interests, and desire for the committee or training opportunities.

- Analyze the survey results in a pilot on 125 Ees. and generate a spread sheet of employee basic data for the committee.

2)Employment/Human Resources-

- Identify the training available to the unemployed in the region.

- Based on the employee survey identify gaps in training.

- Identify which community resources should be available in the social Action Centre to assist Ees.who may become redundant.

-Make recommendations to the committee for action on identified training priorities.

 

3)Finance- - develop a cost sheet reflecting the number of positions lost due to material shortages.

- identify fiscal issues which can help to stabilize the facility through the transition to a market economy.

- Track all committee costs to maintain an accurate record of the time involved in the process, in order that should financing be available there would be a record of time related costs.

- Prepare a financial report detailing the companies last 12 months of production with related costs and employment impacts. ready for hand delivery to Moscow and Feodor Prokopov by December 12/92.

 

4)Social Action Centre-

- Identify an appropriate location for a centre that would be accessible and comfortable for the employees.

- Identify what services should be available in the centre, to best serve the workers.

- Determine who will staff the centre.

 

5) Productivity Improvement & New Product development:

- Identify which areas of production are most likely to become redundant.

- Look at possible new product lines compatible with the existing operation.

- Examine possible technologies that will increase productivity and improve the plants market position.

 

Each sub-committee had specific personnel assigned to the above tasks with time frames for action during the month that the consultant would be away in Canada. The main committee was expected to meet to make recommendations to the government or the company based on results of the sub-committee activity. Moscow consultants would be kept up to date by the regional employment service members on the committee, during december and early January.

 

RESULTS:

 

1) a comprehensive Newsletter was issued in december ; outlining the committees objectives, membership, and detailing the upcoming survey questionnaire.

 

2) information sessions were held with all employees who were to complete the questionnaire. The sessions were used to clarify employees concerns and address the survey completion.

 

 3)125 survey questionnaires were distributed and 108 were returned.

 

4) as a result the survey questions were clarified and are now in printing for 1,500 additional employees. Target is February '93 for the larger survey.

 

5)survey results were analyzed and employee priorities included retraining in areas of carpenter, construction trades, seamstress and starting your own business.

 

6) the coordinating committee met on two(2) additional occasions to review sub-committee activity and action recommendations in training and new product development.

 

7) the employment sub-committee with Local employment Centre support ,mounted a Lacemakers course for 15 of the companies unemployed .

 

8) research was carried out to confirm the demands for construction related skills, and identified the vacancies do exist in this area.

 

9) the employment sub-committee identified possible instructors available to mount skill training. They also worked at identifying those employees who will benefit from a transitional training program similar to that used in adjustment in Canada.

 

10)the finance sub-committee completed three detailed reports on the companies financial situation and how that effected employment at the facility over the past year.

 

11) the finance sub-comm. negotiated new supplier agreements with two moscow firms and a German firm, in order to access new raw materials. This provided several weeks of production but not a full time return to work for all.

 

12) the firm through the Prod. Improv. & New Prod. Development group obtained Regional Employment centre support for the purchase of new equipment which expands their product line . This created 22 new positions in which employees who would have been redundant were trained in early January '93, to stabilize their longer term prospects.

 

13) the Social Action Centre committee identified a location at the front entrance to the plant and the committee on their recommendation has proceeded with renovations to make it practical and comfortable. Occupancy will be announced in the newsletter of January 23/93.

 

 14) the social Action Sub-comm. has set up a network of employee support groups to work as an early warning system as employees encounter adjustment difficulties. This will provide an additional data base to the survey for which services are most required to assist employees as the redundancy occurs.

 

15) the members of the coordinating committee sit on the privatization sub-comm.and as a result have an excellent early warning mechanism concerning which employees will be affected first. This will allow for the early registration of claimants for Unemployment Benefits , on site at the Action Centre when required.

 

RECOMMENDATIONS:

 

1) Federal Employment Service, Moscow to develop and provide training for Regional Employment Centre staff who will be ERT specialists in their area.

 

2) FES maintain central coordinating role; maintain a clearing house for ERT experience and exchange of information nationally.

 

3) Early Response Teams be established as an intensive initiating activity with the company and the employees. A strongly action oriented agenda, with limited time frames, leads to quick success in establishing credibility and confidence in the process.

 

4) Moscow maintain a Central Library Resource of Sample ERT surveys, Newsletters, lists of Training Programs developed by committees; accessible for future committee use.

 

5) ERT Agreements or Contracts be developed for the local level, similar to the Canadian Agreement, and used to clearly define committee structure. This can provide the information for the scope and authority of the ERT relative to traditional labour and management relationships. It also clearly delineates and maintains managements traditional operational role as separate from the ERT.

 

6) Guidelines should be developed specific to the delivery of the establishment of an Early Response Team and should include:a) a ERT consultants Handbook, which incorporates procedures, sample materials, tools for delivery, and general guidelines. Certain elements of this initiative may be available from the Canadian program guidelines submitted in the December report.

 

7) A transitional program such as the Adjustment Training provided by Anne Hemsworth of Mohawk College to the Vladimir employment centre staff, be developed as a first stage intervention for redundant workers.

 

 8) Examine the potential for a community based committee such as the canadian Community Futures model which can develop additional strategies in areas such as: Community Investment Funds; Committee Activity; Business Development Centres and Self Employment Incentives programs.

 

9) Refer. I. Introduction p.14/25, para.4 (Hewitt'92)- a contract should be developed to establish ERT committee structural guidelines.

 

10) Refer.II Overview p.16/25,3 ( Hewitt'92)- ERT committee priorities be incorporated into the Regional Employment Centre Plans for dealing with Mass Redundancy.

 

11) Refer. II Overview p.16/25, 6 (Hewitt'92)- Once established with an industry the ERT should assist in the definition of priorities and the identification of the best interventions for the Regional Employment Service Strategy on Redundancy.

 

12) VI-Tripartite ERT, p.7/27 A. Introduction(Hewitt'92)- the description and activities of the Hewitt paper are consistent with the Canadian model of Adjustment and I concur with his approach. The emphasis in delivery however must be on applying the principles with maximum flexibility in each situation.

 

13) VI-Tripartite ERT p.8/27 B.- I would recommend the addition of a Section A , which establishes the " How To Establish an ERT" as outlined in my detailed report of January 30/93. The Oblast or Regional Employment Centre staff would ultimately be the consultants to deliver the service.

 

 

SUMMARY:

 

The activity undertaken by this Laekens Textile Plant committee in their first month of operation is a significant indicator that the ERT model is a workable structure for employee self help in the Russian context. The company and employees with the direct assistance of the Regional and Local Employment service were able to identify strategies to assist the employees and act on those recommendations in a short time frame. This should provide a mechanism for identifying what initiatives are best funded at the local regional, or national level in a mass redundancy program.

 

The Regional level of the employment service appears to be the logical point for the introduction and control of the Early Response Team approach for workers and business. The understanding of the process and the involvement of the National Federal Employment Services Reps. make them and the Vladimir employment personnel key resources for the expansion of the model to areas devastated by the economic restructuring which is occurring. The direct training of these personnel in the consultation process would be the next most reasonable step to prepare for the establishment of other pilots and ultimately operational ERT's across Russia.