Up to 400 workers at the Borjomi mineral water plant in Georgia went on strike as the company’s Russian owner was hit with sanctions and the company stopped paying wages.
The Georgian government, meanwhile, claims to have drawn up a plan to bail out the company by taking over Russian shares.
Borjomi’s salty-tasting mineral water is extremely popular throughout Russia, where it is widely believed to have health benefits.
End of April, Borjomi announced that he was stoppage of productionciting disruptions to market access and banking services caused by the war in Ukraine.
While the company’s mineral water is an iconic Georgian brand, Russia’s Alfa Group owns 60% of its shares. Following the Russian invasion, the company and its co-founder Mikhail Fridman were hit with US and EU sanctions.
The European Union said in his announcement that Fridman had “actively supported materially or financially and benefited from the Russian decision-makers responsible for the annexation of Crimea and the destabilization of Ukraine”.
While talks between workers and management failed to find a new arrangement to preserve jobs during the crisis, the company in early May laid off 50 employees, most of them production workers, through what the company called a “reorganization.” The union argued that the decision was a punitive measure against workers who had carried out a successful strike the previous year.
In the meantime, the government and the company have drawn up a plan for the state to take over part of the shares – presumably 11% – of Alfa, which would leave the majority of the shares in unauthorized hands. Georgian media reported that the remaining 40% of the company’s shares belonged to the family of late Georgian billionaire Badri Patarkatsishvili, who sold the majority shareholding to Alfa in 2013.
“The state will become a co-owner of Borjomi, which will solve this problem,” Prime Minister Irakli Garibashvili told a government session. June 6. Garibashvili said the economy ministry had “virtually” concluded talks with IDS Borjomi and the issue would be discussed at a government session the following week.
Garibashvili made a similar promise on May 21, two days after the company announcement that, following negotiations, it had presented to the Georgian government “a formal offer for the free allocation of part of its shares”. Without specifying the number of shares it was ready to sell, the company said that this decision “would allow the Georgian government to participate in the management of the international company”.
The prime minister went on to mention a figure of “around $100 million” in shares that the company was prepared to grant to the government, which he said would help the company continue to operate uninterrupted.
But Garibashvili then traveled abroad for visits to Jordan, Israel and Slovakia, and with no agreement in place and wages being paid, workers at the factory took action.
Around 400 workers went on strike on May 31, with requests including reinstatement of dismissed workers, payment of wages, permanent contracts, wage increases and a collective agreement.
The workers “have not received a salary for two months, they have illegally fired 50 employees, they are forcing, blackmailing and threatening employees into accepting and agreeing to exploitative conditions”, said Giorgi Diasamidze, chief of a union representing the workers of Borjomi, while it addressed to the strikers June 6.
The strike came as the company announcement it had resumed production in small volumes, mainly to supply the Georgian market.
Also on June 6, the Ministry of Health, Labor and Social Affairs said it instructed the National Labor Inspectorate and a mediator to try to negotiate an agreement between workers and management.
The company said in a statement that she was willing to cooperate with the Inspectorate but cited “extremely limited financial resources” and “challenges the company faces amid imposed sanctions, frozen [bank] accounts and complicated access to markets.
IDS Borjomi International, which also operates water companies in Russia and Ukraine, operates two factories in Georgia through its subsidiary employing more than 600 people, half of whom are production workers. In total, more than 1,000 workers are expected to lose their jobs if the company stops operating, company officials said.