Professional development of personnel and staff optimization are key priorities in human resources management at RAO "UES of Russia".

In 2002, the main aspects of work at OAO RAO "UES of Russia" regarding HR management were:

• improving personnel efficiency by introducing advanced management techniques and streamlining the organizational structure and staffing;
• optimising the number of employees at energy utilities and management companies;
• creating and developing human capital reserve;
• ensuring staff professional and career development;
• further training of staff, developing and implementing education programs;
• enhancing employee compensation and incentive system;
• ensuring social rehabilitation of staff laid off in the process of the Company's reorganization;
• providing further effort to improve employee life and health protection and prevent industrial injuries.

In 2002, as a result of workforce downsizing the average number of staff employed by the Holding Company decreased by 32.9 thousand people compared to 2001, or 5.0% of the total number of employees, including 20.1 thousand of technical and operational staff (3.3%). Over 2002, the average number of employees in the Company shrank by 3.1 thousand compared to 2001.

Further Training of Personnel

On June 24, 2002, the Management Board of OAO RAO "UES of Russia" approved the Program for reforming the system of professional training and retraining, and improving qualification of personnel of RAO "UES of Russia" Holding Company. This Program seeks to establish an efficient system of professional training for energy companies' personnel and provide various educational and training courses within that system to enhance professional and managerial skills of the staff. In 2002, the Russian Civil Service Academy under the President of the Russian Federation started a post-graduate program to train research specialists for electricity companies. In 2002, the Company made cooperation agreements with the Ministry of Education and Russia's major universities, such as Academy of National Economy under the Government of the Russian Federation, the State University of Management and some other educational organizations. Work is underway to establish a Corporate Educational and Research Center of the Unified Energy System.

Professional and managerial staff who attended training courses in Economics, Finance, and Management in 2001-2002; persons
	2001	2002	2002/2001, %
Total in the Holding Company	9,345	10,154	108.7
Total in the Company	1,005	1,138	113.2

The training system provided training and professional development services to all categories of staff. In 2002, over 42.5 thousand workers received training and more than 231 thousand workers upgraded their professional skills.

Personnel structure of RAO "UES of Russia", breakdown by categories, %
	2000	2001	2002
Workers	69.8	69.1	68.5
Professional staff	17.1	17.8	17.8
Managerial staff	13.1	13.1	13.7
Total	100.0	100.0	100.0

Creation of Human Capital Reserve and Managerial Teams

Development of human capital capable of implementing reforms in the Company implies promotion of prospective managers and creation of a pool of candidates for managerial positions. To handle this task more effectively and ensure further use of IT in personnel management, RAO "UES of Russia" created a common workforce reserve database.

Since 2001, RAO "UES of Russia" has held competitions for the Best Management Team among the energy companies of the Holding Company. In 2002, the management teams of OAO "Kamskaya HPP", OAO "Kostromskaya TPP", OAO "Management Company "Volga Hydroenergy Cascade", OAO "Pskovenergo", OAO "Udmurtenergo", OAO "Orenburgenergo", and OAO "Tyumenenergo" won the "Best Management Team among the SDCs of OAO RAO "UES of Russia" awards.

Social Policy

For the purpose of improving the Company's employee compensation system, a decision was taken to establish social partnership within the framework of the Sectoral Rate Agreement (SRA) in the electricity industry for 2002. On the basis of the Agreement, most companies concluded collective agreements specifying and expanding its provisions.

A better social protection for RAO "UES of Russia" personnel is ensured by additional pension plans and voluntary medical insurance.

To alleviate the social consequences of the reform, RAO "UES of Russia" has developed and signed a Supplement to the SRA defining social safety net measures for employees during the restructuring of the electricity utility. This Supplement is an integral part of the SRA covering the procedure for payment and amount of severance paid to terminated employees, and an obligation to provide to employees other kinds of support (non-governmental pension schemes, professional retraining, assistance in employment, and legal advice). The Supplement also regulates the Company's relationships with the industrial trade union and municipal authorities.

Following the approval of the Supplement to the SRA, most SDCs have already developed compensation programs for employees terminated in the process of the Company's reorganization. In 2002, as part of the Agreement with the Ministry of Education of the Russian Federation, OAO "Kurskenergo" and OAO "Pskovenergo" launched pilot projects to handle the social aspects of the electricity reform. These projects seek to develop and test social innovations designed to ensure jobs for power utility employees laid off in the reorganization.