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SUSTAINABILITY REPORTA social partner of the Company. MOPO participates in the searchfor solutions of the most complicated social and economic issuespertaining to relations between the employer and employees. It clarifieswhat is happening within the Company and explains why, andoutlines how the employees' situation depends on the results of theCompany as a whole.MOPO has developed its strategy and regularly analyzes its achievementsas well as any unresolved partnership issues. It conducts trainingprogrammes and advanced courses for leaders and activistsin trade union organisations.Feedback from employees is received through grassroots organisations;each union member can communicate with a local union leader.This process is a channel through which trade union members bringforward their problems or issues of concern. The MOPO Council analyzesthe feedback and presents results of the analysis to the Presidentof the Company. Similarly, main new developments in the Company'slife are related to each employee. Conferences with the top managersof LUKOIL are conducted in the regions where the Company operateson a regular basis.An event unprecedented in the history of the Russian trade unionmovement took place in 2004: the Company signed an Agreementon Cooperation with the International Federation of Chemical,Energy, Mine and General Workers' Unions (ICEM) 7 and with theTrade Union of Oil, Gas and Construction Workers of the RussianFederation (ROGWU) 8 which is the industrial union with whichMOPO is affiliated. MOPO initiated work on this document and afterconsultation the management of the Company supported the initiative.To ensure that cooperation is not on paper only, an ICEM networkoperates in the Company's organisations helping them toexchange information and watching the implementation of commitmentsby the Company.7ICEM has 20 million members in 20 countries (http://www.icem-cis.ru/ICEMcis.htm.)8ROGWU includes over 3,200 grassroots organisations, 32 territorial and 4 inter-regionaltrade union organisations in various companies, including LUKOIL and Gazprom(http://www.rogwu.ru/).44
SOCIAL POLICYREGULATION OF LABOUR, EMPLOYMENTAND RELATIONS OF PRODUCTIONRestructuring"Taking into consideration the scale of employmentin LUKOIL Group organisations and the single-industryeconomy of many regions in which they operate,the Company takes a socially responsible approachto restructuring its units, as well as to de-localizationof the production facilities."LUKOIL Social Code, Part I. p. 1.1.1.In 2002 LUKOIL adopted its Restructuring Programme through 2010aimed at cutting the Company's expenses and increasing its competitiveness9 .Following the reorganisation of structural units and removal of non-coreassets from the Company's subsidiaries in 2004, the number of staffmembers in the exploration and production section was reduced byalmost 7,640 people (or 8.1%) compared to 2003 and in oil refining by1,980 (or 8.7%). At the same time, the number of employees in oil distributiongrew by 4,480 people (or 15.9%) compared to 2003 becauseof the expansion of the petrol station network.Any changes due to closure, merger or reorganisation naturally causesocial tension among workers, especially in the regions where theCompany is a sole employer. MOPO is very helpful in that respect, butthe process is still not painless. During mass employee dismissals, inaddition to observing the law the Company takes steps to moderatethe consequences of dislocations in regional labour markets. Below aresome of the best solutions discovered by joint efforts:employees are notified of upcoming reorganisations and receiveexplanations in advance;new hiring stops well in advance of reorganisation;9The concept is presented at the website www.lukoil.ru.45
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Page 43 and 44: SOCIAL POLICYCollective bargaining
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INDEX OF COMPLIANCE WITH GRIREPORTI
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INDEPENDENT ASSURANCE STATEMENTMeth
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INDEPENDENT ASSURANCE STATEMENTit c
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INDEPENDENT ASSURANCE STATEMENTReco
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