IDT awards UC Rusal workers 12% wage hike over two years

THE Industrial Disputes Tribunal (IDT) has awarded a long-awaited pay increase to production workers at UC Rusal Alumina Company of 12 per cent, for the period 2019 to 2021.

A division of the tribunal comprising Donald “Danny” Roberts, chairman; Jacqueline Irons; and Dr Denese Morrison, awarded increases of six per cent for the first year of the agreement, which ended November 2, 2020 and a further six per cent increase as of November 3, 2021.

This was in response to the claim by the Union of Clerical, Administrative and Supervisory Employees (UCASE), which represents 500 full-time production workers, for a wage increase of 12 per cent in the initial year and a further 15 per cent in year two.

The tribunal said that it could not meet the demand of UCASE to make the bauxite company, by way of the settlement with UC Rusal, “by way of our settlement with UC Rusal”, the market leader in wages and other fringe benefits

The award followed six months of arbitration and 27 meetings held by the IDT division, comprising labour expert Chairman Danny Roberts and including Irons and Dr Morrison. However, the reference to the IDT by the minister of labour and social security followed some two years of failed local level negotiations as well as the conciliatory efforts of the MLSS.

Witnesses for UCASE included its general secretary, John Levy, who insisted that “the union’s claim is in keeping with normal industry standards and in keeping with the principles of the Decent Work Agenda”.

The union, in light of its wage claim for 12 per cent and 15 per cent over the respective years, urged the tribunal to give due consideration to: provide a level of wage increase that restores the bauxite sector and in particular, UC Rusal, “as the benchmark for all the top companies, such as Caribbean Cement, Petrojam Limited, Jamaica Public Service Limited [JPS] and Seprod, to name a few”.

The union suggested that it was necessary to restore the worker’s purchasing power over the two year period.

But UC Rusal’s Managing Director Leonid Stavitskiy noted that the company’s brief, which showed that the cost to implement the union’s claim would be in excess of US$10.6 million, and that, in its continued operations, the company is dependent on support from its parent company to survive, as the local operation is not profitable.

Stavitskiy noted that since the recommissioning of the of the Ewarton Refinery in 2010, UC Rusal Jamaica has sustained substantial losses which have been confirmed by its audited financial statements, prepared by a reputable independent audit firm, KPMG, and which shows accumulated deficit of just over one billion dollars as of December 31, 2020.

He noted that as a result of the closure, the Jamaican Government had granted the company a concession to the bauxite production levy, to enable the restart of the refinery, and assist the company with arriving at a commercially reasonable production cost to maintain the operations.

He pointed out that the conditions for the remission of the bauxite levy were met by the company, and that the Ewarton plant was opened on July 22, 2010.

The company also referred to sanctions imposed by the US Government in 2018 on the Russian-owned UC Rusal, and the impact it had on the value of its shares; its suspension from the London Metal Exchange in April 2018; the “unattractiveness” of its products on the international commodity market; and the surge in aluminium prices to a six-year high, albeit temporary.

He said that, despite the “significant losses” since reopening in 2010, the company awarded a 10 per cent salary increase to employees, effective January 1, 2015 and introduced an Employee Incentive Bonus Scheme with a payout of 10 per cent in June, 2015, which has subsequently been increased to 15 per cent.

UC Rusal put on record an offer to the union of five per cent in year one, and five per cent in year two, while noting that the waiver on the bauxite levy was part of an agreement with the Jamaican Government for the company to use the respite to modernise and upgrade its equipment. However, he disagreed with UCASE President Vincent Morrison that the company had failed to modernise the plant.

UC Rusal’s Human Resource Director Glendon Johnson reiterated that the impact of the 2008 global financial crisis on the aluminium market eventually forced the company to begin operating on a three-day work week in April 2009. A redundancy exercise was effected in March 2010 at a cost of US$23 million, and that in July of the same year it restarted operations with employees offered a fixed-term contract, and the hourly paid workers reduced by 10 per cent under that contract.

The IDT’s response was that the factual evidence was that Jamaica’s bauxite and alumina sector faces a number of challenges, primarily among which is the cost of energy and caustic soda. They also noted a gradual decline in the aluminium content in its bauxite ore, which had to do with the longevity of the plants.

“While the Ewarton Alumina Plant remains the only one open at present in Jamaica, the age and size of the plant has resulted in increasing production costs, and a decline in Ewarton’s alumina production in 2019, 2020 and 2021, when compared with any three years in the period prior to its closure.

“There was volatility in price of aluminium, as evident in the significant changes between 2018 and 2021, where the CRU alumina price index and the alumina average spot price in 2018 averaged around US$474.21 per metric tons, while in 2021 it had fallen to an average of approximately US$332.73 metric tons,” the IDT said.

However, the tribunal noted while the spot price of alumina has been increasing incrementally since 2020, “UC Rusal’s operations are expected to be affected, in the short to medium term”, as a result of Russian-Ukrainian war.

The IDT, eventually, ruled that, “it is clear on the evidence that there is a justifiable demand for improvements in wages and fringe benefits on the part of the workers”. But that the state of the company’s finances “would not allow for those demands to be met wholesale”.

The tribunal said that it is, therefore,” obliged to weigh these factors in coming to a decision that is proportional, reasonable and fair”. The IDT, however, agreed to some improvements in fringe benefits including; a $3,000 award for laundry allowance; extension of Incentive Bonus Payments to the employees engaged at Kirkvine.

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