People and skills - KPO Sustainability Report 2021

As of end 2021, the total number of employees in KPO, including those working on temporary projects, made up 4,076 people with 3,878 of them being Qazaq nationals and 198 expatriates.

The graph 10 shows the ratio of employees, taking into account the specifics of labour relations, to the total headcount of the Сompany at the end of the reporting period, broken down by years.

Graph 9. KPO employees, 2019–2021

ГGraph 10. KPO employees by type of employment, 2019–2021

* The EAEU – the Eurasian Economic Union – is an association within the framework of international economic cooperation of several states of the Eurasian region – Russia, Kazakhstan, Kyrgyzstan, Belarus and Armenia.

Graph 11 shows the ratio of employees by gender. In 2021, 2,968 men and 1,108 women worked at KPO.

Graph 11. KPO employees by gender, 2019– 2021

As of end 2021, the number of temporary employees5 totalled 73.

⁵ Temporary employee is an external candidate hired for a limited time to replace a directly hired employee, who is on unpaid or maternity leave or seconded to a Parent Company.

Why is it important to us?

Developing and operating the Karachaganak Field requires thousands of dedicated and talented employees in a wide range of disciplines, from petroleum engineers and technicians to accountants and logistics specialists.

Our people are the key to our success. Company invest in the development of our national workforce using the international expertise of our Parent companies, appropriate classroom training and renowned educational institutions.

As of end 2021, total number of KPO employees made up

4,076

people

The map describes the geography of where KPO employees reside across the country

Fig. 10. KPO employees by region, 2021

Graph 12 shows the turnover of local employees in 2021 broken down by age groups regardless of the type of contract

Graph 12. Personnel turnover by age, 2021 (local)

Graph 13 shows the turnover of local employees in 2020 broken down by gender. In 2021, the new employees hired in KPO made up 2.6 % of the average number of employees, in comparison to 2020 – 2.3 %. The dropout made up 9.1 %.

The turnover made 0.7 % in 2021 versus 1.1 % in 2020 (see Graph 14).

According to the RoQ Labour legislation, the turnover indicator includes only the number of employees, who resigned on a voluntary basis.

Graph 13. Personnel turnover by gender, 2021 (local) G

Graph 14. Dynamics of local personnel turnover, 2019–2021

Note: Calculation of local turnover indicator is performed according to the following formula: personnel turnover = the number of personnel, who voluntarily resigned during the reporting year / the average number of employees for the same period × 100.

EMPLOYEE RELATIONS

Engagement with trade unions

Collective bargaining is essential in the Company. Trade unions play a key role in supporting and protecting employees’ rights. Trade unions develop draft Collective Agreements addressing various aspects of social and labour relations and bargain with the Company to improve working conditions of the employees. Three Trade Unions represent the interests of KPO employees:

Public Association “Local Trade Union of Karachaganak Petroleum Operating B.V. employees”;
Public Association “Karachaganak Local Professional Union of KPO employees and contractors”
Public Association “TRUST” Local Trade Union of Karachaganak Petroleum Operating B.V. employees and contractor companies”.

At the end of 2021, the trade unions and the employer signed a new Collective Agreement for the period 2022–2024. Provisions of the Collective Agreement are applied to all KPO employees regardless of their membership in the Trade Unions.

In particular, under the terms of the New Collective Agreement, a number of new social payments and benefits were increased and introduced, such as the provision of advance payments, social assistance to families of employees raising disabled children, assistance to families of employees raising three or more children of school age, including children of 18 years old, the percentage of payment for combining duties has been increased in the amount of at least 10 % of the monthly base salary. In addition, a number of benefits were agreed for veterans who retired from the Karachaganakgazprom JSC or the Company, including an increase in the amount of bonuses for the Oil and Gas Complex Workers Day.

In accordance with the Collective agreement, KPO has the obligation to raise a minimum two-month (8 weeks) notice to Trade Unions in case of liquidation of the Company with a subsequent reduction in staff, system or amount of remuneration leading to deprivation of employees’ conditions.

Along with this, the Employee Relations Sector is working to control the funds allocated under the Collective Agreement for the Trade Unions to carry out socially oriented, cultural, mass and physical education work.

Why is it important to us?

Employee relations are based on an agreement between the employee and the employer on the performance of the employee’s labor function and the provision of the necessary conditions and remuneration by the employer.

Employee relations in KPO are regulated by the Labor Code of the Republic of Qazaqstan. If the terms of the employment agreement are not observed by both the employee and the employer, there are risks of human rights violation such as: the right to work in just and favorable conditions, protection against unemployment, the right to equal pay for equal work, the right to just and favorable remuneration, the right to form and to join trade unions to protect their interests, the right to reasonable limitation of working hours and paid leave.

In 2021, HR received 97 applications, including grievances on such issues as labour misconduct, employment, conflict resolution, abuse of power and etc.

Grievance mechanisms

At present, the Company has a few grievance mechanisms: applications to HR Controllership either directly or through Trade Union, and via the anonymous Hotline.

In 2021, HR received 97 applications, including grievances. The received grievances addressed such issues as labour misconduct, employment, conflict resolution, abuse of power, misconduct with contractor employees. Also, employees gave feedback on the new Collective Agreement. All received grievances were reviewed and resolved, including in the pre-trial procedure and at the stage before the cases' consideration in the Conciliation Commission.

Voluntary Dissolution of Employment Relationship

The Company supports the application of the Voluntary Dissolution of Employment Relationship Programme as part of the Collective Agreement and pursuant to the RoQ Labour Code dated 2017 (Art. 52). The programme applies to men aged 58-63 and women aged 53-58. In 2021, 43 KPO employees applied for the voluntary dissolution of employment relations (43 employees in 2020, 42 employees in 2019, 24 employees in 2018 and 45 employees in 2017).

In order to optimize costs, increase efficiency and maintain the Company’s competitiveness, in the end of 2021 the Company repeated the experience of Programme for Voluntary Dissolution of Employment Relations. 20 applications were approved under this programme in 2021.

The Company supports the application of the Voluntary Dissolution of Employment Relationship Programme as part of the Collective Agreement and pursuant to the RoQ Labour Code dated 2017 (Art. 52)

INDUSTRIAL RELATIONS

To avoid violations of the rights of contractors and subcontractors’ employees monitoring and analysis of the situation in work collectives are regularly carried out in order to reveal and correct potential factors, as well as causes and conditions resulting in social and economic violations, impairment of employees’ legal rights. The causes of such risks can be lack of acceptable social and living conditions and non-observance of legal regulations by contractors and subcontractors.

In the process of inspections of violations of human/employee rights KPO makes efforts to ensure comprehensive and timely review of claims/reports, as well as to resolve issues in due time. During considerations, views of all sides are taken into account and analysed, and possible measures are taken to protect and restore employment rights in accordance with the RoQ legislation and the Company’s procedures.

The operational targets at the Karachaganak field and activities for the implementation of the projects for further enhancement are mainly carried out with participation of contractor companies. Thus, successful fulfilment of the set targets and achievement of process performance depends on how balanced labour relations are both in KPO and in collectives of the involved contractors and subcontractors.

In 2021, Industrial Relations personnel carried out 177 trips and visited 260 work sites and camps. Also, 19 joint audits were conducted.

In 2021, 19 complaints from contractors’ employees on various issues were received and closed. Social and living conditions were inspected: work places, catering facilities etc. Following the results of monitoring, audits and considerations of the received applications of 43 contractors coordinated by Industrial Relations Section, measures for improvement of accommodation and labour conditions were taken. That, in its turn, had a positive effect on maintaining stable moral and psychological climate in the working collectives.

As part of the activities for prevention of violations of employees/workers’ rights, monitoring of compliance with the declared working and social and living conditions is conducted. In the process of the specified activities a comprehensive approach is applied: each claim/application is considered through analysis and ensuring completeness of information.

One of such examples was an application of a contractor employee to KPO regarding violation of the labour law, specifically non-admission to work due to not having vaccination against COVID-19 and refusal to increase the wages. As a result of the inspection, the claimant’s employer admitted the employee to the work place and increased the wages by 25 %.

As part of support for local providers of goods and services, from the end of 2020 KPO had been facilitating the implementation of mandatory PCR-testing of contractor personnel. During 2021 the Company continued full reimbursement of these costs at its own expense.

In addition, the Company has provided support in increasing the number of vaccinated contractor personnel as a leader and positive example.

COMPENSATION AND BENEFITS

The success of any business largely depends on the team qualifications, therefore KPO’s HR policy is aimed at strengthening the leading position in the market and achieving strategic goals through the creation and development of a professional team, as well as increasing its motivation.

In order to ensure the employee right to pay as per qualifications, complexity of work, quantity and quality of work performed, as well as working conditions, KPO applies the following tools:

The remuneration system based on a consistent approach in setting wages, which ensures fair remuneration for all staff;
The job evaluation process regulation for effective organizational structure management, as well as to ensure the validity of remuneration;
Performance and Development Review (PDR) application;
Maintaining fair work conditions through a variety of benefits.

A package of benefits is provided to all KPO direct employees; the package consists of monetary and non-monetary rewards. For the employees hired at KPO via recruitment agencies, the collective agreements of these agencies are applied.

Most rewards are included in the Collective Agreement. Agreement signed in 2019 remained effective for the period 2019–2021. During 2021, preparations were made for the signing of the new collective agreement version, and in December 2021 an agreement was reached. The new version contains a number of improvements regarding, among other, the employees’ social conditions. This Collective Agreement will be valid from 2022 to 2024.

Pursuant to the existing procedures, each year KPO offers an upgrade on the employees’ remuneration, including the cost-of-living salary increase at the beginning of the year, annual performance review bonus for those, who received positive ratings based on annual performance, and also individual pay rises and additional lump sum payments.

In January 2021, an 8% general salary increase was made reflecting the inflation level for the previous year.

According to the annual benchmarking for compliance with the market level of remuneration in oil and gas sector in Qazaqstan, the average salary in KPO as of 2021 was higher than an average salary in the West Qazaqstan Oblast (WQO). As a result of this analysis, no additional salary adjustment was proposed in 2021.

It should be noted that in December 2021, the Company was awarded the Grand Prix of the Paryz-2021 Republican competition on corporate social responsibility for achieving high results in the areas of corporate social and environmental responsibility.

Performance and Development Review

Performance and Development Review (PDR) is one of the feedback tools aimed at monitoring and enhancing work efficiency. The PDR process covers Qazaqstani employees, who have an employment agreement with KPO for minimum half a year.

COMPENSATION AND BENEFITS

In order to ensure the employee right to pay as per qualifications, complexity of work, quantity and quality of work performed, as well as working conditions, KPO applies the following tools:

The remuneration system based on a consistent approach in setting wages, which ensures fair remuneration for all staff;
The job evaluation process regulation for effective organizational structure management, as well as to ensure the validity of remuneration;
Performance and Development Review (PDR) application;
Maintaining fair work conditions through a variety of benefits.

Why is it important to us?

Attracting and retaining qualified and talented professionals are our main risks. KPO strives to ensure competitive labour market conditions among oil companies in Qazaqstan, which helps to attract high-potential candidates and reduces the risk of staff turnover.

One of the reasons for the KPO attractiveness as an employer is due performance of duties undertaken by the Company and respect for the employees’ labour rights.

in December 2021, the Company was awarded the Grand Prix of the Paryz-2021 Republican competition on corporate social responsibility for achieving high results in the field of corporate social and environmental responsibility.

In January 2021, an 8% general salary increase was made reflecting the inflation level for the previous year.

Performance and Development Review

Ratings distribution scale includes “Strong”, “Fully Effective” and “Needs Improvement”.

For those employees holding managerial positions, a process to monitor their Key Performance Indicators against the set targets is arranged separately.

DEVELOPMENT OF NATIONAL PERSONNEL

Development of national personnel is a continuous process in KPO. Professional competency is maintained and developed through the training and skill improvement system.

In 2020, KPO in conjunction with the Authority approved the 2020–2025 Programme for Local Content Increase in Staff. The outcomes of the previous programme were also taken into account while developing the new one.

In 2021, 13 positions previously held by expatriate personnel were nationalised, 45 positions were abolished. Local employees made up 95 % of the total Company’s staff as of December 2021. In total, 246 expatriate specialists were replaced with national employees and 284 positions held by expatriate employees were abolished in the period of 1999 – 2021. The breakdown by categories is presented in table 22.

Additionally, in accordance with the goals set in this Programme, KPO keeps tracking the local content in contractor personnel registered in the West Qazaqstan Oblast. In 2021, 43 companies provided their quarterly, biannual and annual Local Content in Staff reports. The local content in staff within these organizations made up to 90 % in the category ‘Department / Unit Management’ and 97 % in the category ‘Professional staff / Qualified workers’. The Local Content increase in KPO and in contractor companies during 2021 is due to COVID restrictions, which put a strain on expatriate specialists’ arrival to work and due to completion of several major projects.

Graph 15 presents the total number of expatriate and local senior and mid-level management of the Company split by age and gender. This includes KPO core structure and temporary projects.

Why is it important to us?

The strategic approach of KPO HR to the process of local content increase involves both replacing expatriate personnel with national staff and implementation of the local staff professional training and development. This ensures that all operations are carried out competently, with high quality and in compliance with international standards. This approach contributes to the replacement of foreign personnel with minimum risks for production activities, and the achievement of the set goals with the highest quality.

Without the annual Training Plan the Company would have faced the following risks:

Failure to fulfil its obligations under the FPSA.
Incompliance with legislative requirements in industrial safety, environmental and labour protection.
Lack of competent workforce to fulfil the Company resourcing needs.
Delay or failure to achieve targets for local content in staff.

Tab. 22. Increase of Local Content in KPO staff by categories of employees

Category	Description	RoQ legal requirement	Local content in staff
Category	Description	RoQ legal requirement	2021	2020	2019
1+2	Executive management and their deputies, Department / Unit management	Minimum 70 %	85 %	83 %	79 %
3+4	Professional staff / qualified workers	Minimum 90 %	98 %	97 %	96 %

Graph 15. Number of local and expatriate managers by age and gender, 2021

Percentage of local and expatriate managers by gender

Percentage of local and expatriate managers by age

PERSONNEL TRAINING AND DEVELOPMENT

PERSONNEL TRAINING

Every year, KPO conducts training programmes aimed to achieve the following objectives:

to enhance the employees’ individual job-related competencies, and address operational and career development needs.
To teach mandatory skills required to perform the job at hazardous production facilities. The training obligations are subject to the RoQ legislation and the Company procedures.

In 2021, 91 % of the Company’s local employees were trained or engaged in various professional development programmes, professional training and retraining, and took part in online seminars and conferences.

Besides, in 2021, KPO continued conducting training for employees on the specialized international programmes (see table 23), language skills, and professional and mandatory HSE courses.

Tab 23. KPO personnel trained on the International Qualification certified programmes in 2018 – 2021

Programme name	2018	2019	2020	2021
Well control/well pressure control during gas, oil and water shows (IWCF)	39	59	13	61
Non-destrucitve testing certification (NDT)	30	33	3	13
CIPS International diploma (certified programme of Chartered Institute of Procurement and Supply)	11		10	13
Emergency response training course MEMIR by OPITO standard	43	19		17
International certificate in Health, Environment and Safety (NEBOSH)		11	12	9
Certified internal auditor (CIA)		2	3
OPITO Expert competency assessment		15
ACCA Diploma in International Financial Reporting (DipIFR)			3	2
Master of Business Administration (MBA)			1	1
American Petroleum Institute certification (API)			6	10
Project Management Professional (PMP)® Certification				1
IEMA International certificate in Environmental Management (IEMA)				1

Why is it important to us?

Personnel training and development programmes in KPO are aimed at developing personnel competency, practicing the knowledge acquired and ensuring compliance with international standards by applying best international practices.

Provision of training programmes allows the Company:

to fulfil the requirements of FPSA Annex 7 related to the training, re-training and professional development for Qazaqstani employees consistent with International Good Oil Field Practices, as well as HSE and industrial hygiene requirements.
to deliver programmes that enable for the local content increase in staff and supply the organization with skilled, qualified and competent workforce.
to undertake training activities related to operational requirements and personnel professional development in order to achieve production and exploration targets.
to deliver specific and mandatory HSE certified training programmes for the Company’s personnel, required by RoQ legislation, the Company’s internal procedures and best international practices.

raining statistics

As responsible organization, KPO ensures mandatory HSE training both for its own staff and personnel of its contractor organizations.

In 2021, 405,221 hours of training (445,122 hours in 2020) were held, of which 250,581 were provided to KPO employees (295,495 in 2020). The remaining 154,640 hours (201,128 hours in 2020) were spent on the HSE mandatory courses for the contractor organizations’ employees.

Totally, in 2021 20,169 people were trained, 3,644 of them – KPO employees and 16,525 – contractor personnel. Average training hours are given in graph 17.

Graph 16. Average number of training hours per one training course passed by nominated KPO employees in 2021, by type

Training arranged for KPO employees in 2021 by categories is shown in Table 24.

Tab. 24. Training of employees by categories, 2019–2021

Category	2021	2020	2019
1. Managers and supervisors	121 people (34.72 hours per 1 employee)	92 people (73.99 hours per 1 employee)	161 people (66.60 hours per 1 employee)
2. Qualified specialists / supervisors	1,636 people (49.35 hours per 1 employee)	1,439 people (81.93 hours per 1 employee)	1,250 people (88.96 hours per 1 employee)
3. Technical personnel	1,715 people (94.01 hours per 1 employee)	1,484 people (113.01 hours per 1 employee)	2,044 people (111.73 hours per 1 employee)
4. Office and administrative personnel	1,172 people (25.72 hours per 1 employee)	119 people (25.81 hours per 1 employee)	150 people (86.53 hours per 1 employee)

Enhanced development programme

In order to ensure the continuity of workforce planning and increase local content in staff, KPO implements the Enhanced Development Programme.

In the second half of 2021, KPO launched the 4th intake of the Talent Pool Enhanced Development Programme for the period of 2021–2024. Based on the plan to increase local content in staff, the departments’ heads nominated high-potential employees for further participation in the selection stages of the Programme. Implementation of next steps is scheduled for 2022.