The State of Labor in Iran’s Oil and Petrochemical Industry

Translator’s note: On May 24, a massive explosion and fire at a newly inaugurated oil refinery in Abadan led to the deaths and injuries of an unknown number of workers. The explosion, caused by technical problems, occurred during a facility inauguration ceremony that had prompted President Mahmoud Ahmadinejad to boast of Iran’s growing capacity to refine oil. According to Hamid Reza Katouzian, head of the Energy Commission of the Majles, Iran’s parliament, “experts had forewarned that the Abadan refinery was not ready to be inaugurated.”

The explosion underscored once again the lack of safe working conditions in Iran’s oil and petrochemical industry. In addition, recent labor strikes have challenged the industry’s reliance on temporary contracts for its labor force. In March, 1,800 contract workers at the Tabriz Petrochemical Complex demanded that they be hired directly in order to receive the benefits and job security provisions to which permanent employees are entitled. In April, 1,500 striking workers at the Imam Khomeini Port Petrochemical Complex located in Khuzestan near the Gulf made similar demands.

Most recently, factional conflicts within the Majles over control of the income generated from oil production have led to leadership changes in the Oil Ministry. First, Ahmadinejad dismissed the oil minister and appointed himself “caretaker for the Oil Ministry.” When parliament deputies and the Guardian Council called this act illegal, he appointed one of his allies, Mohammad Ali Abadi, as the new temporary “caretaker.” Below are excerpts from a recent interview with Iranian economist Mohammad Maljoo in which he addresses the state of labor in the oil industry. It was published in the May 2011 issue of the Tehran-based journal Mehrnameh. This translation was originally published by Tehran Bureau on June 5, 2011.

Author: Mohmmad Maljoo
Date: May 2011
Translated by Frieda Afary

Mehrnameh: In the years after the Iran-Iraq War, how did the method used for resolving the problem of [the low rate of] accumulation of capital, affect the abilities of the labor force?

Maljoo: In order to be precise, I will focus solely on the labor force in the oil industry… In the period after the Iran-Iraq War, and under the administrations known as “Reconstruction and Reform” [those, respectively, of Akbar Hashemi Rafsanjani and Mohammad Khatami], one of the most important components of the effort to increase the rate of accumulation of capital was the cheapening of labor power. Within the oil industry, the realization of this goal was made possible in four phases.

The first phase consisted of the “clericalization” process, a plan to raise the wages and benefits of workers to the level of office workers. Hence, promotions for oil industry workers were facilitated under the presidency of Hashemi Rafsanjani. Workers were allowed to be promoted to office worker status without changing their job description. At the same time, a variety of cash and non-cash benefits for workers were cut. These benefits were kept for office workers. The majority of workers filled out the new employment forms and were turned into office workers while maintaining their old job description.

The workers who were aware and did not succumb to this arrangement were legally entitled to protest in face of the financial difficulties which had gripped them. However, they could not do so because they were now a minority. These workers either had to voluntarily resign in exchange for receiving their severance pay, or join the ranks of the office workers. The majority of them opted for the severance pay. Ultimately, the fate of the majority of the workers who had become office workers was the same [as those who had been terminated with severance pay]. However, this happened through a different route.

As a rule, office workers in the oil industry are in some ways considered managers. Unlike workers who follow the regulations of the Labor Ministry, office workers follow the regulations of the Oil Ministry. Hence they do not have the right to strike or the right to form labor unions. The “clericalization” project of the oil industry in fact legally deprived the workers who had now become office workers from any right to protest or complain to the Labor Ministry.

Although the workers who had now become office workers were many, they had no right to protest when their clerk classification benefits were gradually eliminated over the course of two years and when they faced financial pressures imposed by their managers. This sector of the labor force only had two choices: Early retirement or termination with severance pay.

The second phase [of the plan to increase the rate of accumulation of capital] was put on the agenda concomitant with the clericalization process. This phase consisted of throwing an avalanche of outsourcing projects on the oil industry. By creating contract- work agreements, the National Iranian Oil Company (NIOC) avoided its responsibility for defending the rights of office workers.

The method was as follows: NIOC would ask for bids from contractors. The contractor whose bid was accepted would sign a contract with NIOC and receive funds from it. NIOC would then introduce its personnel to the contractor. Ultimately, all services such as payment of wages, insurance, benefits, etc. were put in the hands of the contractor. NIOC had rid itself of its responsibility toward workers.

However, during the years after the Iran-Iraq War, the level of production in the oil and gas industry was more or less increasing, and required hiring a new cadre of skilled workers. The third phase addressed this need. The mushrooming of contractors which provided human resources was in fact responding to this need. However, it is interesting to note that the bulk of the labor force hired by these contractors, consisted of the personnel who had retired early or had been terminated with severance pay.

The distinguishing feature of the type of employment offered by contractors was the temporary character of the employment contracts. Whether the agreement was a contract which employed workers for a little less than one year, or a temporary agreement which employed workers for one to six months, the common feature of all these employment agreements was that they deprived workers of job protection.

The fourth phase consisted of preparing the legal basis for such contracts, a legal basis which the 1990 Labor Code had provided years ago. According to the second amendment of Article Seven of the Labor Code, “If the nature of the work is continuous, and if no length of time is stated in the contract, the contract shall be considered permanent.” Another way of stating the above is that if the nature of the work is continuous, the employer can determine a set amount of time in his/her contract with workers, and employ them on a temporary basis in types of work that are continuous. The Labor Code not only legitimized temporary contracts, but also legally facilitated the expulsion of workers who had temporary contracts.

It is difficult to estimate the absolute and relative size of the temporary labor force in the oil industry in the years after the Iran-Iraq War. Depending on the industry sector and the geographical location, the size fluctuates between 60 and 90 percent of the workforce.

Please note that the plan to turn the labor force into a temporary labor force, did not only lead to a lowering of all wages. It also gravely affected the other components which determine the conditions of labor and the subsistence level of the labor force. These components include housing, the employment process, the length of the working day, the annual vacation time, job security, workplace safety, the extent to which benefits authorized by the Labor Code were applied or excluded.

In the years after the Iran-Iraq war, the mushrooming of contractors which provided personnel, the extended outsourcing as well as the massive increase in temporary workers, and hence the cheapening of the labor force, have led to a decline in job security and a decline in the individual and collective bargaining power of the labor force. Hiring temporary contract workers allows employers to circumvent labor laws and pay workers the lowest salaries. The temporary character of labor and the lack of job security, decreases solidarity among workers, especially given the continuously high unemployment rate. . .

This translation was originally published by Tehran Bureau on June 5, 2011

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