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. Last Updated: 07/27/2016

GAZ, Aeroflot to Fire Thousands of Workers

Car giant GAZ Group and the state airline Aeroflot will dismiss thousands of workers by the end of the year, the Health and Social Development Ministry said Thursday, signaling gathering storm clouds even as the government sees a rebound in the economy.

Oleg Deripaska’s GAZ Group will lay off 14,000 employees, or 37 percent of its work force, while Aeroflot will fire 2,215 employees, or 14 percent of its staff, the ministry said.

The layoffs at GAZ Group, a strategic partner in the Magna-Sberbank deal to buy Opel from GM last week, will be distributed throughout its subsidiaries, the ministry said. GAZ itself plans to lay off 5,840, or 37 percent of its 16,000-person work force, while GAZ Factory is planning to let go of 5,840 workers, or 75 percent of its 7,781 employees, it said. Some of GAZ Group’s smaller subsidiaries are also dismissing a significant part of their staff.

A GAZ spokeswoman denied the figures, saying the carmaker had not reached any decisions on layoffs but that many future job cuts would come in the form of an employee retraining program.

“We’ve recently launched a personnel retraining program that will either raise workers’ qualifications or prepare them for working in a different sector,” she told The Moscow Times. “Workers will be paid the main part of their salary throughout the yearlong training course.”

The first course started Sept. 1 and included 4,000 employees, she said.

Retraining seminars are part of a federal government effort to limit a surge in unemployment during the economic crisis. The government, worried about widespread unemployment leading to social unrest, has put together a billion-dollar jobs stimulus program.

Politically, bailing out a struggling carmaker may be easier for the government than dealing with mass layoffs, said Luc Jones, a partner at the Antal recruiting firm. “Most of these enterprises are located in one-industry cities, and firing thousands of people in a city like Tolyatti, for example, would cause a riot,” he said. “So it is easier for the government to keep these people working. Otherwise, somebody will have to manage redundancies and answer for the consequences.”

But the announcement that GAZ will dismiss a huge chunk of its work force represents an effort by the company to pressure the government into providing additional financial support, said Vladimir Gimpelson, director at the Center for Labor Research.

“There is a possibility that the recently released layoff figure is a way to intimidate the federal authorities,” Gimpelson said. “AvtoVAZ, which threatened layoffs earlier, will get government aid as announced today.”

Vedomosti reported Thursday that AvtoVAZ, the country’s largest carmaker, was in talks with the government on a second round of assistance. News media reported earlier this month that the Tolyatti-based AvtoVAZ had notified the Health and Social Development Ministry that it would lay off 36,000 people by the end of December. (Story, Page 7)

Aeroflot spokeswoman Irina Dannenberg declined comment on the ministry’s layoff announcement, saying she did not have time to speak.

Aeroflot chief executive Vitaly Savelyev warned on Wednesday that the carrier might lay off even more employees — a total of 6,000 people by the end of the year — if passenger numbers didn’t pick up.

Jones said more layoffs could be in the offing because many outdated Soviet-era enterprises have come to a point they don’t need as much manpower to operate.

“The problem with most of the companies that are state-owned or partially state-owned is that they usually have too many people working and are not operating very efficiently,” Jones said.

“These companies need proper structuring, and job cuts should have been made years ago, as these kind of reforms should be made in good times,” he said.

GAZ may be in line for support from sources other than the government, however. Under the Opel deal, Opel’s new management intends to invest about 170 million euros ($250 million) of the support it receives from the German government into its business in Russia, including its partnership with GAZ.