Широко шагает Сумгаит

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AZERBAIJAN: BEYOND ENERGY EXPORTS, THE GLOBAL DOWNTURN IS BATTERING LOCAL INDUSTRY

Text by Shahin Abbasov

The global downturn is punishing Azerbaijan’s third largest city, Sumgayit, a onetime center for the Soviet military-industrial complex that is still struggling to find its stride in the global economy.

Sumgayit’s industrial base has been ravaged by the combined effects of sharply lower energy prices and the contraction of credit. Factory employees, who asked not to be named, told EurasiaNet that all five of the state-owned chemical company Azerkimya’s plants and the state-owned Azerboru pipe factory in the city stopped production in early March. Another industrial giant, Azeraluminum, which produces 70 percent of Sumgayit’s annual industrial output, is working at just 15 percent of its usual capacity, producing only 25 tons of primary aluminum per month.

A worker from Azerkimya’s synthetic rubber plant said that more than 1,000 of its 1,400 employees have been sent on unpaid leave, adding that salaries have not been paid since January. "The situation is similar at the other four Azerkimya plants," he said. "We do not know how the situation will develop further and have no idea what we should do."

Azerkimya employs more than 7,500 people in Sumgayit, a city of about 305,000 people located 30 kilometers from the Azerbaijani capital, Baku.

Official statistics confirm that Azerbaijan’s chemical industry is experiencing a severe decline. Azerkimya’s production dropped by 72.5 percent between February 2008 and February 2009, while its exports decreased 8.5 times, according to the State Statistics Committee. Economist Rasim Huseynov claims that Azerkimya’s plants have four months’ worth of production left unsold, data that is confirmed by the State Statistics Committee.

Representatives of Azerkimya did not respond to written questions from EurasiaNet about its troubles. Company officials originally requested the questions in writing after a EurasiaNet correspondent approached them with interview requests.

At Azeraluminum, executives are predictably attributing the plant’s troubles to the worldwide economic crisis. A company employee told EurasiaNet that only 200 of the plant’s 1,000 Sumgayit employees are still working, although salaries have not been paid since January. Three-hundred-and-forty workers have been on unpaid leave since April 1 and all 700 of the company’s employees in the city of Ganja have also been laid off.

Azerboru, the pipe-making factory, has sent all but 146 of its 1,146 Sumgayit employees on unpaid leave, according to several employees. They added that they had not been paid in months. Like Azerkimya, Azerboru management did not respond to submitted written questions about the factory’s situation.

Even before the latest closures, Sumgayit had been familiar with economic hardship. So far, it does not seem as though surging local unemployment could produce social instability. Cameraman Vugar Mammadov, who lives in Sumgayit but works in Baku, said that no protests had taken place yet in the city. "It’s good that Sumgayit is located so close to Baku and a large part of the population works in the capital. It helps to reduce social tension," Mammadov said. Local workers, he added, have gotten used to delays with salaries and unpaid leaves.

The risk of rising tension nonetheless persists, believes Zohrab Ismayilov, head of the Public Association for Assistance to a Free Economy, a Baku-based economic think-tank. "The simultaneous emergence of thousands of unemployed people is a serious problem for one city," Ismayilov said. Government support for low-interest loans and tax holidays, among other means would help create new jobs in Sumgayit, he suggested.

Representatives of the Sumgayit city government stated only that the factories are not under their control and declined all further comment.

Sumgayit’s woes are part of a larger unemployment problem. A source at the State Oil Company of the Azerbaijani Republic (SOCAR), Azerbaijan’s largest employer, told Turan news agency on April 23 that the government had ordered the company to dismiss men born in and before 1947 and women born in and before 1952. Salaries for the rest of SOCAR’s 65,000 employees will be slashed by 30 to 35 percent, the source said. SOCAR executives have not commented on the report.

For now, official unemployment figures are comparatively modest, primarily because of the current preference for sending idle workers on unpaid leave. At an April 10 news conference, State Statistics Committee Chairman Arif Valiyev claimed that, technically speaking, only 6,000 jobs had been lost in Azerbaijan during the first quarter of 2009. He added that competition for jobs was also increasing; in February, five unemployed people were said to be competing for each job vacancy, compared with a three-to-one ration in September 2008.

The government, for its part, has pledged support for the state-owned factories in Sumgayit. "The government should do its best to soften the social welfare problems of their workers," President Ilham Aliyev declared at an April 22 cabinet meeting. Wages, he added, should be paid "for several months ahead."

The president did not identify the way to overcome the crisis in Azerbaijan’s chemical, aluminum and metallurgical industries, but pledged that "after the global crisis ends, the government will put additional investments into these industries."

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