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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