The message on the signs in the hands of picketers outside the Cabinet of Ministers last week was all too familiar: ‘Cabinet, give us our wages for the last 11 months.’
Less familiar were those holding the signs, all of whom work in Ukraine’s lucrative oil and gas sector.
Around 400 oil and gas industry workers from around the country converged on the Cabinet Dec. 22, calling for tax reform within the oil and gas industry and demanding months of unpaid wages.
Gas and oil workers are owed Hr 2 million in back wages, which equal approximately Hr 2,500 per worker employed in the sector. That is even more than Ukraine’s famously neglected coal miners are owed, according to Oleksandr Popel, president of the Oil and Gas Industry Workers’ Trade Union.
Last week’s picket was arranged by Popel’s union and was timed to coincide with parliament’s hearing of next year’s proposed budget.
Workers object to what they call prohibitive taxes on the industry in the draft 1999 budget, which proposes to raise an additional Hr 10.9 billion by taxing the transportation and sale of oil and gas.
‘The budgetary committee has introduced draconian taxes on the activities of oil and gas enterprises,’ said Artur Guber, press spokesman from Naftogaz Ukrainy. ‘If parliament passes this, we can’t talk about paying wages.’
Guber argued that much of the 30 billion cubic meters of gas Ukraine receives for the transit of Russian gas across Ukrainian territory goes to technological needs within the industry, a factor that the tax does not take into account. Neither does the tax account for the large percentage of that gas that is sold to Ukrainian households at half the market rate.
‘All profits go to the government, which gives nothing in return,’ Popel said.
Guber and Popel also noted that chronic non-payment for gas and oil by Ukrainian industry makes it even harder on the gas suppliers.
Guber said that the level of payment for gas supply to Ukrainian companies is 45 percent. Of that, only 6 percent is paid in cash and the rest is paid in barter.
According to Guber, Naftogaz Ukrainy – the state oil and gas umbrella company that manages most aspects of gas buying, transporting and selling in Ukraine – has come up with a proposal to pay off the back wages. The proposal calls for paying off the wages partially in cash up front and partially in securities that will earn 20-40 percent interest. Such a system, he said, would allow the government to clear its back wages in the industry by mid-1999.
Although Popel personally knew little about the scheme and doubted it would be quite so efficient, he said it was unfortunate that the scheme would most likely never materialize.
‘I don’t know how it will work, I’m not a financier,’ he said. ‘I have difficulty believing in it, but when a person is in dire straits, he’ll grasp at straws.’
