17 January 2023

BY CHANGING THE STATUS OF EMPLOYEES TO “SERVICE PROVIDERS”, INDORAMA AGRO IS DECIMATING UNION MEMBERSHIP. INTERNATIONAL STAKEHOLDERS INCLUDING EBRD, IFC AND BCI MUST ENSURE COMPLIANCE WITH NATIONAL AND INTERNATIONAL LABOR STANDARDS.

On December 28, 2022, 392 workers of Indorama Agro in the Syrdarya region of Uzbekistan were told that their contracts as Nano Unit Workers (NUWs) would not be extended. Instead, they would be given new “service contracts”, whereby the former NUWs would be required to grow cotton and grain for the company for a paltry fee and assume all of the associated entrepreneurial risks. The new contracts effectively ended their employment relationship with the company although the work and activities set out in them are almost identical to those in their previous contracts...

In March 2021, workers at Indorama Agro in Syrdarya region voted in an unprecedented decision to form the country’s first democratically elected trade union. This initiative was in response to growing dissatisfaction among workers caused by mass redundancies, including poor working conditions, low wages, and abuse of civil legal contracts instead of fixed term employment contracts which deprived workers of social benefits and security of employment...

However, the very existence of the trade union has come under threat following the latest round of reclassifying workers’ contracts at Indorama Agro. In January 2022, former brigadiers – most of them former farmers whose land had been illegally confiscated – were given contracts that effectively made them responsible for the cultivation and harvest of cotton and grain in so-called Nano Units comprising 100-125 hectares of land. The brigadiers, now known as Nano Unit Workers (NUWs), retained their employment contracts and received a monthly salary, on top of which they were eligible for bonuses if they exceeded often unrealistically high production targets.

The new NUW contracts were limited to one year only and expired at the end of December 2022. On November 30, 2022, the trade union leader, Sherzod Aliboev, himself a former NUW, wrote to Indorama Agro management requesting clarity on when they could expect their contracts to be renewed but received no answer. The company refused further requests to clarify the position of the NUWs as late as December 22, 2022, one week before the contracts were due to expire. The new contracts were developed without prior consultation with the trade union in violation of the Uzbek Labor Code.

The new contracts are deeply problematic for several reasons. Firstly, they are a clear attempt to deny workers secure employment and social security. Secondly, by removing their employment status, it is highly likely that they can no longer retain their union membership, a clear attempt to prevent freedom of association and collective bargaining. Thirdly, earning potential has been significantly curtailed by reducing plots of land from 100-125 hectares to only 80 hectares. Fourthly, with a fee of only approximately $106 per month from which they are expected to cover expenses, there is an increased risk that child and forced labor may become the last resort. Finally, the company’s refusal to give sufficient notice of termination of employment has left NUWs with little or no choice but to sign up to these exploitative contracts.

These blatant violations of Uzbek national labor law and the impact on Uzbekistan’s only democratically elected trade union is a severe blow to freedom of association. As the majority of the union’s membership was composed of NUWs, this move will inevitably lead to a hollowing out of union activity just when workers need it most. This latest event follows the refusal to renew the contracts of some 300 field workers, also union members, at the end of December 2021...