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Mining and metallurgical companies rely on the formation of a personnel reserve starting from the training bench

The Ukrainian labor market in 2021 was recovering after a difficult 2020. Experts note that the number of vacancies last year in the economy as a whole increased by a record 3-5 times. However, the number of employees in the steel sector has declined in the past year.

As of the end of 2021, the average number of full-time employees in steel industry and the production of metal products decreased by 8%, or by 14.5 thousand people, to 165.7 thousand people. Approximately 70% of them are employees of steel enterprises directly. It should be noted that fluctuations in the number of employees in this “dual” industry at the level of 10 thousand people within one year is a normal state of affairs.

Also, the decrease in the number of employees in steel industry is associated with the modernization and digitalization of production, which require fewer workers. This reduces the need for low-skilled labor and increases the demand for highly qualified personnel.

Normal movement

The situation on the labor market in the mining & metals industry is slightly different from the general one in the country. In general, in Ukraine there is now “candidate market” when the applicant can theoretically dictate his conditions to the employer. In mining & metals industry, things are a little different.

“I would characterize the balance in the sectoral labor market as 50/50. In the mining & metals industry, the employer and employee are more dependent on each other than in other industries. On the one hand, industry enterprises are located in single-industry towns, where it is not so easy, and sometimes even impossible, to find another job. On the other hand, the industry is constantly in need of qualified personnel, which is also a non-trivial task to find without significant expenditure of resources for training and retraining. And our labor market is already de facto international. Moreover, it is international unilaterally – to leave, “- speaks Executive Director of the Federation of Metallurgists of Ukraine Sergiy Belenky.

The situation with staff turnover in 2021 at the largest mining & metals companies was generally normal. Production has grown within the existing technical capabilities of enterprises, which means that there was no need to either optimize the number of personnel or increase it.

“In 2021, the staff turnover at the Ukrainian enterprises of the group did not exceed 10%. We consider this level acceptable. The Covid restrictions have not significantly affected the company’s operations as we have implemented an extensive program to protect and immunize our employees. Today, more than 70% of employees have been vaccinated at Ukrainian enterprises, and at some plants the level of immunization is close to 100%. Thanks to this, the incidence in the company in 2021 was at the level of the pre-coronavirus period,” emphasizes Metinvest.

The number of employees of the Metinvest group at the end of 2021 reached 87 thousand people. Growth is associated with the acquisition of a single property complex Dniprovsky metalls plant and Pokrovska coal group. Last year, the group did not implement a program to optimize the headcount.

At ArcelorMittal Kryvyi Rih, staff turnover for 2021 was 3.05%. The number of personnel decreased by 444 people.

“The increase in wages and the preservation of the social package helped the company reduce the outflow of personnel. No matter how difficult the industry is experiencing, we are constantly working to retain our entire workforce. While the unemployment rate in Ukraine has increased by 53%, the outflow of personnel has decreased by half,” explains Julia Zabolotna, Director of Human Resources at ArcelorMittal Kryvyi Rih.

In turn, Ferrexpo last year managed to successfully implement a number of projects to modernize and automate production. This allowed more efficient allocate labor resources, improve the skills of employees through additional training and obtaining new functional skills on the basis of their own Center for Technical Expertise and with the involvement of external experts.

“All these initiatives make it possible to keep the percentage of staff turnover at a low level (“natural”, related to retirement, etc.) and maintain expertise within the company,” emphasizes the Ferrexpo.

Queue behind the scenes

The key factors influencing the labor market in the mining & metals industry are the state of the economy of the country and the industry, as well as the situation with labor migration. In 2020, due to closed borders due to quarantine restrictions, it was low. However, already in 2021, as soon as the borders were opened, the departure of Ukrainians to work abroad immediately increased sharply. In 2021, Ukraine received over $15 billion in money transfers from migrant workers. This is an absolute record in the history of independence.

“According to the data of the National Bank, labor migration has accelerated in 2021. And sharply. And not only in comparison with a very quarantine year 2020, but also with pre-quarantine 2019,” speaks Viktor Skarshevsky, Vice-President of the Ukrainian Union of Industrialists and Entrepreneurs.

Therefore, it is not surprising that companies in the industry continue to talk about a shortage of personnel, especially technical specialties.

“The shortage of engineering and workforce still persists, and the outflow of personnel from Ukraine to the countries of Eastern Europe continues,” Metinvest says.

Labor migration affects, as noted in Ferrexpo, the speed of filling vacancies due to the lack of qualified personnel in the market. And also on rising staff costs implemented by mining & metals companies in order to bring the level of remuneration and social benefits closer to the European level and maintain competitiveness.

“Practically any highly qualified specialist who owns a technical specialty is now in demand. Be it an engineer, a welder, a turner, a mechanic, a builder or an excavator driver. It’s hard to single out anyone in particular. It often depends on the region and even on the specific enterprise,” notes Sergiy Belenky.

On the other hand, the majority of migrant workers travel to Europe for a relatively short period of time, within the framework of existing visa restrictions. Therefore, when they return, they again get jobs within the country.

“There is an influx of personnel from abroad. There are employees in Ukraine who leave for Poland, but there are others who return and come to our Ukrainian enterprises,” Metinvest added.

Talent Creation

Attracting personnel from the domestic labor market is limited by supply, which in turn is affected by labor migration. It is difficult to influence it on a national scale. And given that Western countries are gradually easing anti-COVID restrictions, the scale of labor migration may accelerate. That is why the largest mining & metals companies partially make a bet on the formation of its personnel reserve starting from the training bench – school, technical lyceum or university.

“This year we are launching a program aimed at more effective cooperation with educational institutions in Mariupol, Kryvyi Rih and Zaporozhye, which train working specialists for us. It involves investment in updating the educational fund. We have initiated changes to Ukrainian training standards for a number of working professions, which, in particular, include a reduction in the training time for such specialists,” Metinvest notes.

Also this year, the group plans to complete the construction of the campus of the first non-state mining and metallurgical university Metinvest Polytechnica, which will accept the first bachelor students in the fall.

For its part, ArcelorMittal Kryvyi Rih announced last year the construction new pelletizing plant – a modern industrial facility that will replace obsolete sinter shops. The company decided to train 300 metallurgists of a new formation to work at this factory.

“We are doing this together with two leading Kryvyi Rih universities – Kryvyi Rih National University and the State University of Economics and Technology. Over the next three years, the company will invest UAH 70 million in education, scholarships, internships abroad for students who are ready to start their careers in an international company,” says Yulia Zabolotnaya.

In turn, Ferrexpo also works closely with educational institutions – from school to university. Within the framework of this initiative, such programs as a specialized class of the company in schools, partnership with technical educational institutions on the implementation of the dual education program have been implemented.

“In the future, the company plans to start cooperation on dual education with higher education institutions,” Ferrexpo notes.

The work of mining & metals companies directly with students will make it possible to quickly involve young people in work and involve them in more complex and, accordingly, higher-paid jobs. Increasing the well-being of young professionals can help companies curb the outflow of labor and prevent labor migration.