AvtoVAZ to Kill 27,600 Jobs

The largest Russian car manufacturer, AvtoVAZ, announced today it plans to cut about a quarter of its workforce in an effort to compensate for the severe drop in sales it is experiencing with its Lada model. According to union leaders quoted by Autonews, this cut would mean some 27,600 people out of the over 100,000 employees will lose their jobs.

"The enterprise is working on one shift and at 65 percent of capacity. Lowering personnel numbers is essential in such a situation," AvtoVAZ said in a statement, quoted by the source. The number of jobs to be slashed is way over the initial estimates, which claimed in early September AvtoVAZ may cut "only" 5,000 posts.

Still, according to the company, nearly half of those to be laid off (13,000) are pensioners, expected to leave in September and October, with an extra 5,500, close to the retirement age, to join them. Company's estimates show that a new wave of restructuring will come in 2012, when no less than 9,100 younger workers will be asked to leave. 2012 is also the year when AvtuVAZ will launch a joint project with partner Renault.

AvtoVAZ appointed a new president last month, namely Igor Komarov, a former adviser for Russian Technologies, which owns part of the carmaker. The move was made in light of recent developments, when AvtoVAZ was severely struck by the economic recession and the collapse of the Russian automotive sector.

Also last month, more than 2,000 workers demonstrated against pay and production cuts and asked the Russian government to take over the automaker and begin an investigation concerning alleged misuse of funds by the company's management.