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SUSTAINABILITY REPORTand gradually introduces new methods that are discussed withemployees through their trade union organisations.The system combines centralized regulation by the Company with localregulation by its subsidiaries. The latter are notified of the maximumlevel of average income per employee indexed to consumer pricesin their region on a monthly basis. Subsidiaries set their wage rates andsalaries and determine systems of remuneration and motivation basedon the minimal wage rate and within the limits of the funds set asidefor salaries. The minimal wage rate is established by the AgreementBetween the Employer and the Trade Union Association.In 2004 the average income per employee was about 20% higher thanin 2003. Every quarter the Company reconsiders the minimal guaranteedwage rate for a first grade worker. In most of the organisations,that rate exceeds not only the level specified in the Agreement but alsothe subsistence level in the region.The Company constantly engages in systematising the processes ofremuneration and motivation improvement thereby ensuring:uniformity of remuneration and motivation policy for all LUKOILGroup organisations;a minimal level of guaranteed pay in LUKOIL Group organisations toprovide for basic vital needs and ensure some disposable income;transparency, objectivity and competitiveness in the system ofremuneration and motivation;regular indexation of wages based on the index of consumer prices;flexible bonus systems that fully reflect individual contributionsof employees;periodic wage raises related to productivity growth.48