Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Union Says AvtoVAZ Faces 1,500 Job Cuts

Up to 1,500 workers at carmaker AvtoVAZ could be facing the ax by August, Pyotr Zolotaryov, leader of the Yedinstvo independent trade union at the company, said Wednesday.

Company representatives downplayed the claims, however, saying the staff cuts were a result of natural wastage that would optimize efficiency at the carmaker.

"We are gradually letting go people who have reached the age at which they can claim their pension," AvtoVAZ spokesman Ivan Skrylnik said in a telephone interview.

Skrylnik said downsizing measures -- which will see an approximately 1.5 percent reduction to the company's 120,000-strong workforce -- have been planned for several years and are intended to increase efficiency at the firm's Tolyatti plant.

Skrylnik denied media reports that AvtoVAZ plans to use the 75 million ruble ($2.9 million) reduction in annual labor costs resulting from the cuts to fund a general increase in wages at the carmaker by around 5 percent.

Skrylnik also rejected claims that the measures were related to AvtoVAZ's plans to scale back production for 2007 in response to lower sales in the first five months of the year. Kommersant reported last Wednesday that AvtoVAZ was set to produce 720,600 vehicles and 164,100 car assembly kits this year, a decrease of 6.6 percent and 12.7 percent respectively on original output targets.

Zolotaryov was dismissive of the company's claim that downsizing at the company could improve the working conditions of current employees.

"Talks of salary increases for those left after job cuts are a fairy tale. ... We are still being paid a meager 6,000 rubles to 8,000 rubles," Zolotaryov said.

"The management is letting go of experienced workers through natural wastage, while young workers are leaving the company in droves because of poor working conditions."

With its 120,000 employees, AvtoVAZ still remains Tolyatti's main employer, as well as the mainstay of the city's economy.

"However efficient the move is, in a city of 700,000, laying off workers -- even those of pension age -- by the main employer smacks of tragedy," said Andrei Lyapin, leader of the 1,300-member Interregional Trade Union of Autoworkers.

Lyapin said AvtoVAZ's move was a panic measure, a reflection of its inability to compete with smaller and better-organized firms, such as SKD Auto.

AvtoVAZ currently produces around 730,000 annually, while Renault plants have an output of 2.5 million cars with only 130,000 workers.

"Those being laid off by AvtoVAZ will be picked up by Magna International," Lyapin said, referring to the joint venture between the Canadian auto parts maker and AvtoVAZ. "They will form the backbone of a smaller but more efficient car plant."