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Industrial Relations in the Oil Industry in Nigeriapdf WP.237 SECTORAL ACTIVITIES PROGRAMME Working Paper Industrial relations in the oil industry in Nigeria Sola Fajana Working papers are preliminary documents circulated to stimulate discussion and obtain comments International Labour Office Geneva 2005 Copyright © International Labour Organization 2005 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to the Publications Bureau (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland. The International Labour Office welcomes such applications. Libraries, institutions and other users registered in the United Kingdom with the Copyright Licensing Agency, 90 Tottenham Court Road, London WIT 4LP [Fax: (+44) (0)20 7631 5500; email: [email protected]], in the United States with the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923 [Fax: (+1) (978) 750 4470; email: [email protected]] or in other countries with associated Reproduction Rights Organizations, may make photocopies in accordance with the licences issued to them for this purpose. ISBN:92-2-118272-X (print) ISBN: 92-2-118273-8 (web pdt) The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation ofits frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign ofdisapproval. ILO publications can be obtained through major booksellers or ILO local offices in many countries, or direct from ILO Publications, International Labour Office, CH-1211 Geneva 22, Switzerland. Catalogues or lists of new publications are available free ofcharge from the above address, or by email: [email protected] Visit our web site: www.ilo.org/publns Printed by the International Labour Office, Geneva, Switzerland Preface Oil and gas are essential components of industrialized civilization and economic growth. Although automation has reduced the need for a considerable amount of manual work, important components still rely on human input. Good employer-employee relations are, therefore, critical to the stable production and supply of crude oil for the sustainable development ofthe Nigerian economy, as well as to the world economy as a whole. The aim ofthis paper is to explore practices in industrial relations and social dialogue in the oil industry in Nigeria. The paper examines essential elements for good industrial relations in the sector. It addresses such topics as the positive contribution social dialogue can make towards promoting mutual respect, trust and confidence between the social partners and the Government ofNigeria. The paper was prepared by Professor Sola Fajana, Head, Department of Industrial Relations and Personnel Management, University of Lagos, Lagos, Nigeria. The adopted methods of study include both primary and secondary data collection and analysis. Primary sources were taken from interviews with trade union leaders and employers. Secondary information includes numerous sources such as collective agreements, newspapers and official records. Professor Fajana is to be congratulated for his work and contribution to the improvement of industrial relations in the oil industry through this informative paper. The ILO hopes that it will provide an opportunity to consider ways in which industrial relations in the oil industry might be improved in the interests of both decent work and greater productivity. Norman S. Jennings, Deputy Director, Sectoral Activities Department, International Labour Office. WP-Extemal-2005-12-0148-1-En.doc iii Contents Page Preface . 111 1. Overall situation ofthe oil industry in Nigeria . 1 1.1. General situation .. 1 1.2. Conflict in the Niger Delta .. 1 1.3. Contribution to national economic growth .. 2 1.4. Oil companies operating in Nigeria .. 3 1.5. Employment . 4 1.5.1. Estimated employment . 4 1.5.2. Government's initiative to create employment in the oil sector . 5 1.6. Gender . 5 1.7. Union density .. 5 1.8. Workers' and employers' organization .. 6 1.8.1. Background . 6 1.8.2. Petroleum and Natural Gas Senior StaffAssociation (PENGASSAN) .. 7 1.8.3. National Union ofPetroleum and Natural Gas Workers (NUPENG) . 7 1.8.4. Employers' organizations .. 8 1.9. Evolution ofcorporate restructuring in the oil industry .. 8 1.9.1. Protection ofworkers' rights in time ofchange .. 8 1.9.2. Mitigating measures .. 9 2. Conditions ofwork . 10 2.1. General policy on wages and conditions ofwork in the oil industry .. 10 2.2. Wage adjustments to inflation .. 10 2.3. Wages and fringe benefits . 10 2.4. Wage levels . 12 2.5. Working time . 13 2.6. Conflicts involving hours ofwork . 14 2.7. Overtime . 15 2.8. Paid leave . 15 2.9. Training in the oil sector .. 16 2.10. Occupational accidents .. 16 2.11. Health services . 18 3. Industrial relations in the oil sector .. 19 3.1. Freedom ofassociation and right to organize .. 19 3.2. Right to strike . 19 3.3. Collective agreements . 21 3.4. Grievances . 22 WP-Extemal-2005-12-0148-1-En.doc v 3.5. Petrol prices and tradeunions 25 3.6. Casualization of work and freedom of association 26 3.7. Expatriate workers 27 4. Social dialogue. 29 4.1. Social dialogue in the oil sector 29 4.2. Communications between employers and employees in the oil sector......................... 29 4.3. Means ofpromoting social dialogue in the oil sector 30 4.4. Joint consultation 30 4.5. Contractors' forum........................................................................................................ 31 4.6. Community dialogue..................................................................................................... 32 4.7. The role ofthe state....................................................................................................... 32 4.8. The role oftrade unions in social dialogue................................................................... 33 4.9. Social dialogue and industrial action 34 4.10. Expatriate workers and social dialogue 34 5. Conclusions............................................................................................................................. 36 5.1. Conclusions................................................................................................................... 36 5.2. Recommendations......................................................................................................... 37 6. Bibliography............................................................................................................................ 39 Sectoral working papers 43 Tables 1.1. Multinational oil companiesoperating in Nigeria.. 3 1.2. Selected foreign oil companiesoperating in the Niger Delta with estimated employmentin 2001 4 1.3. Estimated employment in the oil sector in Nigeria 4 1.4. Evolution oftrade union membership in the oil sector in Nigeria, 1999-2003..... 6 2.1. Comparison ofbasic monthly wages ofsenior staff, 2004 (in naira)...................................... 13 2.2. Comparison ofbasic monthlywages of junior staff, 2004 (in naira)...................................... 13 2.3. Number and percentage of occupational injuries with temporary and permanent incapacity by economic sector in 1999-2000 in Nigeria (weighted figure) 17 2.4. Comparison ofmedical coveragein collective agreement in selected oil companies in Nigeria, 2004 18 3.1. Major strikes in the oil sectorin Nigeria, 2000-04 20 Boxes 2.1 Work schedules adopted in the oil sector in Nigeria............................................................... 13 3.1. Resolution mechanisms in Nigeria. 23 3.2. Order in a case ofthe industrial action by PENGASSAN and NUPENG against the Lonestar Drilling Company......................... 23 3.3. An example ofstate interventionto resolve a dispute in the oil sector in Nigeria.................. 24 vi WP·Extemal-2005-12-0148-1-En.doc 4.1. An example ofan employer/employee agreement on manpower reduction in the oil industry in Nigeria 29 4.2. PENGASSEN's views on joint consultation........................................................................... 31 4.3. An example ofthe role of the Government in promoting social dialogue in the oil sector in Nigeria... 32 4.3. Communique issued by PENGASSAN concerning the use ofcasual workers in the oil and gas industry 34 WP-Extemal-2005-12-0148-1-En.doc vii 1. Overall situation of the oil industry in Nigeria 1.1. General situation Nigeria is one of the most strategically important countries in Africa. However, the country is also one ofAfrica's poorest, with a long legacy of corruption, weak institutions and poor economic management. To combat these problems, President Olusegun Obasanjo launched a comprehensive programme of reform to boost growth and reduce poverty in 2003
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