Global Economics

Unions Aim to Push Nestle Out of Russia


The food giant won't negotiate on wages. Workers are threatening to strike, calling the company "anti worker" and saying it should leave the country

Nestl? in Russia is involved in a bitter industrial dispute with its workers. The food giant is refusing to negotiate on the issue of increasing real wages. Russia's labor union federation is now threatening to strike and says the "anti-worker" company shouldn't be allowed to operate in Russia.

A two-meter-tall blue rat runs up and down outside Nestl?'s Moscow headquarters. It's holding up a green Nestl? logo with the word "shameless" written on it. Workers at the Swiss firm's factory in the Ural city of Perm have come all the way to the capital to stage the protest. They are complaining about what they call a refusal on the part of factory management to engage in negations to increase real wages. The workers hold up placards with slogans like "no shame??o conscience," or, "We give the country KitKat, but we don't get a decent wage."

The dispute in Perm is now big news throughout Russia. Despite the public protests, however, Nestl?? is refusing to meet the workers' demands. The Swiss company appears determined to set an example in the Russian provinces.

According to the union, the base monthly wage is just ??160 ($250) at the Perm factory, which produces chocolate bars, sweets and confectionery. The maximum bonus for a worker??nd at Nestl?? most employees are female??s ??350, even if she works the night shift. It's something workers feel they should be allowed dispute.

Nestl?? management calculates things differently. According to company spokeswoman Marina Zibareva, Nestl?? wages are "above the industry average in the city." She says the average wage at the Nestl?? plant is ??460, but that also takes into account the high wages of top executives.

Nestl?? has 10,000 employees working in its 13 factories in Russia. However, only four of those are unionized and the workers in Perm are particularly organized. Two-thirds of the plant's staff of 1,000 are members of a labor union. Hundreds have taken part in the protest actions.

Nestl?? has increased wages in Perm three times over the past year, by 9, 10 and then 15 percent. However, these hikes have not been enough to keep up with the high rate of inflation in the region??hich is officially 16.5 percent, says union secretary Larisa Selivanova. There hasn?? been a real wage increase in years??articularly as the real rate of inflation is actually much higher than the official one, she claims. Many of the factory workers donate blood to boost their incomes. Selivanova says that most can no longer afford to buy meat for their families.

Tensions Reach Boiling Point

In December the trade union demanded a wage increase of 40 percent. The factory management reacted by completely pulling out of negotiations with the union. Even when it reduced its demand to 21.5 percent, the bosses refused to come back to the negotiating table, saying the request was not "economically justified."

The dispute reached a boiling point a few days ago. When the company union called a meeting in the factory, the management suddenly announced that the majority of the union members were indispensable and had to stay working. Of the 200 employees who were expected at the meeting only 50 showed up. In a press release, Nestl?? management said it had "not been possible to release all union members from their duties."

The workers blame one person alone for the current stand-off: Nestl?? factory director Martin Ruepp. He has categorically rejected the union demand to create a binding mechanism for wage increases. The Swiss manager has declared that the company will continue to set wage increases at its own discretion.

Ruepp, 35, has built his career at Nestl??. Before he came to Perm, he oversaw a factory in York, England. The word in Perm is that he was just as tough in his dealings with the unions there.

Union secretary Selivanova says the company puts its workers in Russia under a lot of pressure. For example, she claims it carried out a survey in the factory about the employees' political opinions and their willingness to strike. The company says that this was just a "sociological survey" that was carried out in many firms at the request of the regional government.

No Place in Russia for Anti-Worker Company

Selivanova has been personally exposed to the company's force. After she used the company Intranet to call for a protest in the town, her access to the network was blocked. A company spokeswoman defended this action, saying that Selivanova had spread caricatures that had "maligned" the company.

The Federation of Independent Trade Unions of Russia (FNPR) has now mobilized to support the Perm protest. At a press conference in Moscow, FNPR head Mikhail Shmakov fiercely attacked the multinational, saying an "anti-worker" company like Nestl?? had no place in Russia. He argued that while the Swiss company had increased dividends for shareholders by 17.5 percent, it left its workers empty handed. Shmakov announced that he planned to lodge a complaint with the Organization for Economic Cooperation and Development (OECD) and declared that, if necessary, FNPR would call a strike.

The workers are also finding support for their cause outside of Russia??rom Germany's NGG union and the International Union of Food Workers, for example. For these international organizations the dispute addresses a fundamental issue: They fear that Nestl?? will move more of its production to Russia if it can push through its low-wage policy in Perm.

It is the local workers, however, who are leading the fight. Workers like Selivanova, who has worked at the Nestl?? factory for the past seven years. The university graduate started out working on the assembly line before getting a job as the trade union secretary. At first the company thought highly of her, she says. And: "They thought I would be submissive." But things turned out differently. Thanks to Selivanova's activities, the number of union members at the factory has doubled.

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