40,000 AvtoVAZ Workers Laid Off

AvtoVAZ, manufacturer of Russia's ubiquitous Zhiguli and Lada cars, announced Monday that it was temporarily stopping production and sending 40,000 workers on forced leave due to a continuing strike at the company's assembly plants.


One of the largest car manufacturers in Russia, AvtoVAZ has already lost 45 billion rubles ($16.7 million) due to the assembly workers' strike and stands to lose substantially more if a quick resolution to the dispute is not found.


Yury Stepanov, AvtoVAZ personnel director, said the strike had forced management to suspend operations at plants that produce parts for the cars' construction, and to send workers from these shops on partially paid leave for four days starting Tuesday.


Stepanov said the strike began last Tuesday when one-third of the 2,000 workers at the assembly shop went on strike, demanding that the factory pay them their salaries for August.


"It is complete lawlessness," Stepanov said in a telephone interview from Togliatti, AvtoVAZ's hometown on the Volga river. "The problem could have been solved while keeping the factory working."


The dispute could be duplicated in any number of Russian industries, where a chronic non-payment crisis has forced many companies routinely to delay wage and other payments in a vicious circle of debt. According to the government statistics, Russian firms now owe each other the ruble equivalent of about $51 billion.


Stepanov said AvtoVAZ would produce only spare parts for automobiles this week, while all other operations would be halted. The factory usually produces about 15,000 new cars in a week.


Workers sent on leave are to be paid two-thirds of their monthly salaries, but the assembly shop workers who started the strike would not be paid, Stepanov said.


According to Reuters, the factory owes its workers about 70 billion rubles ($26 million) in backpay.


By last Saturday, the strike had caused the factory more than 45 billion rubles in losses, according to a copy of the factory director's order sending workers on leave, parts of which were quoted over the telephone Monday.


Stepanov estimated that the stoppage would lead to even greater losses, but he declined to give a more precise figure.


He said that a commission, consisting of workers and administration representatives, had been working to find a solution to the strikers' demands since last Thursday and that a resolution was near.


"I can see by the workers' eyes they are understanding that they had started the wrong thing," Stepanov said. "We are reaching understanding."


Representatives of the striking assembly workers could not be reached for comment Monday.


Stepanov said that if a solution had not been found by the end of the four-day stoppage, the roughly 700 assembly workers who began the strike would be fired.


Under an agreement signed between workers and administration earlier this year, the company pays its workers one month in arrears but salaries are indexed to account for inflation, according to Stepanov.


Stepanov explained that delays in salary payment were caused in part by the factory's shutdown for the whole of January, adding that the factory had been paying workers regularly since March.


Meanwhile, the price of AvtoVAZ shares remained has remained unchanged since the strike began, said Dmitry Zinkevich, a financial analyst with the Skate-Press consulting firm.


Stepanov said the company would fall short of the planned annual output of 753,000 cars in 1994, partly as a result of this week's enforced stoppage.