=Paper=
{{Paper
|id=Vol-2422/paper36
|storemode=property
|title=Modeling of Financial Support for the Competitiveness of Employees in the Mining Industry
|pdfUrl=https://ceur-ws.org/Vol-2422/paper36.pdf
|volume=Vol-2422
|authors=Iryna Perevozova,Nadiia Daliak,Vitalina Babenko
|dblpUrl=https://dblp.org/rec/conf/m3e2/PerevozovaDB19
}}
==Modeling of Financial Support for the Competitiveness of Employees in the Mining Industry==
https://ceur-ws.org/Vol-2422/paper36.pdf
444
Modeling of Financial Support for the Competitiveness of
Employees in the Mining Industry
Iryna Perevozova[0000-0002-3878-802X], Nadiia Daliak[0000-0002-1599-842X]
Ivano-Frankovsk National Technical University of Oil and Gas, 1, Chopin Str., Ivano-
Frankivsk, 76000, Ukraine
perevozova@ukr.net, nadiya_d82@ukr.net
Vitalina Babenko[0000-0002-4816-4579]
V. N. Karazin Kharkiv National University, 4, Freedom Sq., Kharkiv, 61022, Ukraine
vitalinababenko@karazin.ua
Abstract. The development of a socially oriented market economy in Ukraine,
the effective implementation of reforms in this direction and the improvement of
the well-being of the population is not possible without qualitative financial
support for the competitiveness of workers, above all, in the mining industry.
However, the absence of effective levers of influence on the organization of high-
tech production in this area, its considerable intensiveness of material and energy,
and its complexity and harm have negatively affected the labor motivation of
miners and the profitability of mining enterprises. Therefore, the urgent issues at
the current stage of development of Ukraine's mining industry are determining
the conditions and opportunities for increasing the competitiveness of employees
in this industry. Scientific novelty of the results is to identify, substantiate and
analyze the main stages of financial support for the competitiveness of workers
in the mining industry under the conditions of a changing vector of the country’s
foreign economic policy and of market for products of this industry. The obtained
results of the research are the basis to both the study and practical solution of the
problem of how to increase the competitiveness of miners in enterprises under
various forms of management. This approach involves not only a high level of
material incentives for highly qualified specialists in mining, but also a
comprehensive development of personnel potential in this industry as a whole.
Keywords: employee, mining industry, mining company, personnel
management.
1 Introduction
The formation of high-tech production in Ukraine, effective implementation of reforms
to this end, increase in gross domestic product and real incomes of citizens is only
possible under the condition of high-quality financial support for the competitiveness
of workers, above all, in the mining industry. However the lack of an effective program
for the development of this industry and inhibition of its socio-economic reforms has
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negatively affected the attitude towards the work by miners and the quality of
development of the mining industry as a whole. Thus, in 2014-2015, the number of
registered unemployed in this industry exceeded other sectors in Ukraine by 4 times.
At the same time, the profitability of operational activity of industrial companies in
Ukraine for the above period decreased more than twice and amounted to less than 1%
[1]. This situation destabilizes the industrial and economic security of the country, as
well as the supply and demand of the labor market in this field.
Taking into account urgency and lack of solution for the aforementioned problem,
the main goal of this study is to characterize financial support for the competitiveness
of the mining industry workers and to develop measures for its improvement. To
achieve this goal, we have identified the following main tasks:
─ to form an apparatus of categories on the interpretation of the essence of the workers’
competitiveness in the mining industry;
─ to identify and characterize the main stages of financial support for the
competitiveness of workers in this field;
─ to propose measures for the effective implementation of the above-mentioned stages.
2 Theory of the Matter
The abovementioned matter has been researched by such scientists as: A. Cardoso [2],
T. Chan, M. Egorova [3], P. Fedotov, E. Zelynskaya [4], G. Gayko, V. Beletsky [5], V.
Ivanov, V. Komarov, P. Pavlov [6], S. Kozlov [7], S. Mahdevari, K. Shahriar, A.
Esfahanipour [8], J. Maiti, S. Chatterjee, S. Bangdiwala [9], Y. Mossakovskyy [10], V.
Nagornuy, V. Globa [11], L. Polishchuk [12], J. Prno [13], J. Ryfkyn [14] and so on.
Thus, scientists have identified the basic principles for the development of mining and
recreation of its labor resources. However, the problem of a complex appraisal of the
competitiveness of miners under the conditions of a changing vector of foreign
economic policy of the country and the market for products of this sector has not been
researched sufficiently.
3 Methodology of the Study
The methodological basis of this study is a general scientific dialectical method of
cognition, in which the object of the study is studied as a dynamic system in the process
of development. Formation of an apparatus of categories of competitiveness of workers
in the mining industry and the main stages of its financial support, carried out on the
basis of dialectical, historical and systemic methods. In the process of studying and
generalizing scientific and practical developments, methods of comparison, analysis
and synthesis, induction and deduction have been applied. Additionally, the study is
based on regulatory and economic documents, developments by research institutions
and scientists.
Mining industry is one of the most traumatic, especially in underground work, where
there is significant gas pollution and dust. Scientists at the University of Michigan [15]
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developed a model for assessing the individual cost of an employee, based on the
notions of conditional and realized value.
The individual value of an employee depends on the expected probability that the
employee will remain working and realizes his potential. That is, the realized cost of
an employee:
RV = UV * P(T), (1)
where UV is the employee’s standard cost, P(T) – the probability that the employee
works at the enterprise until the end of his working age T, taking into account the level
of risks of the industry.
The conditional cost of a UV employee characterizes all the potential profits an
employee can bring to an organization if he has all the rest of his life working in it.
Expected realized cost of an employee RV characterizes the value of an employee, given
the likelihood that he will remain in the organization for some time. The RV poster is
two-component: it consists of two elements: the expected conditional value of UV and
the probability of continuing membership in the organization P(T). The last figure is
the expectation of management about what part of the revenues will be realized in the
organization to the expected time of dismissal of the employee. The mathematical
model of these processes has the form:
Р(Z)=1–Р(T); (2)
AVP = UV – RV = RV * P(Z),
where UV and RV are expected conditional and realized costs;
P(T) – the probability that the employee will remain in the organization after some
time;
P(Z) – the probability of dismissal of the employee from the organization or the rate
of flow;
AVP – alternative flow rates.
In this model, the cost of human resources is probabilistic. For organization, this
may mean that not always the employee with the greatest potential will be the most
useful company. And the HR manager, who seeks to optimize the cost of human
resources, should prefer a candidate with the highest realized value, and not just the
most capable.
For the measurement of the monetary form UV and RV developed stochastic
positional model. It is implemented by such an algorithm:
1. the creation of a base of mutually exclusive positions or positions that can be
occupied by an employee in the organization, that is, the formation of a career path
of the employee – a sequential chain of positions or service statuses with the addition
of such a state as the release from the enterprise;
2. determining the value of each position for the organization, that is, the profit that
will be brought in the future by the employee while on this position. Moreover, the
profit can be attributed to the person of the employee, and to the position that he
occupies, as in the case of personal and positional restorative costs;
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3. determining the expectation of the term of human rights in the organization, that is,
the assessment of the overall life of the person. It is influenced by many factors:
individual expectations, the emotional and physical condition of the employee, the
policy of the company in the area of staff recruitment and remuneration, mobility in
the labor market, etc. All these factors are difficult to determine and measure,
therefore, we can estimate the life of a person only from some probability. And,
speaking of the expected life expectancy, we will have in mind the mathematical
expectation of magnitude. There are two main ways of finding it: the method of
expert evaluation and analytical;
4. the calculation of the probability that the employee will occupy each of the items
specified in item 1 at a certain point in the future. To do this, on the basis of
probabilistic assessments describe the expected career path of the employee up to
release: with which probability each of the next year to the year of expected release
from the organization employee will occupy each of the possible positions. In the
last year of work the probability of dismissal should be equal to 100%. This
probability can be measured by two methods described in the third step. An
analytical method involves three consecutive steps: collection of data on hiring,
moving and dismissal; grouping data according to official status; compilation of
matrices of probability of transitions;
5. discounting the expected future cash income to determine the present value.
The proposed model of employee valuation also describes the dependence of the cost
of human resources on the degree of satisfaction. Therefore, satisfaction must be
measured and communicated to the management of the organization.
Іn the absence of the necessary statistical information for the characterization and
assessment of the competitiveness of the mining industry, in 2017 we have conducted
a sociological survey in 1256 employees of mining industry Donetsk, Luhansk,
Zaporizhia, Kharkiv, Dnipropetrovsk, Lviv, Volyn and Transcarpathia regions of
Ukraine. Using a questionnaire developed by the author, their opinion on the level of
competitiveness of workers in the mining industry has been studied.
Preliminarily, we had formed a set of basic features and characteristics that reflect
various professional and socio-psychological features of miners and form their
competitiveness in the labor market. The main ones are: gender, age, state of health,
marital status and family composition, education, professional qualification level, work
experience, conditions and work remuneration, computer skills, responsibility, and
others. Respondents were asked to evaluate each of these criteria, based on their
importance, and to express it in a ballistic assessment on a scale from 1 (minimum) to
50 (maximum) points. The survey was participated in by: heads of enterprises (20%),
heads of their structural divisions and leading specialists (30%), and ordinary workers
(50%). Meaning, such groups of respondents, whose work is directly related to the
definition and implementation of financial support for increasing the competitiveness
in the mining industry, and those who are direct participants (performers) of individual
production and technological processes.
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4 Discussion of Results
As a result of the analysis, we have established that there are different approaches to
the interpretation of the essence of the competitiveness of workers in the mining
industry. They are similar to each other and differ only in separate constituents. Thus,
within this category most scholars understand the ability of a specialist to fully realize
his right to work in the economic entity of the mining industry and receive appropriate
remuneration for it [2; 4-6; 8; 12-13].
Taking into account the interpretation of the socio-economic category described
above, we have identified the main stages of financial support for the competitiveness
of the mining industry (Fig. 1).
FINANCIAL SUPPORT FOR THE COMPETITIVENESS OF
EMPLOYEES OF MINING INDUSTRY
Financial support for the scientific and practical process of
determining the criteria for the competitiveness of miners and
conducting its sociological assessment
Formation of leading components of financial support measures for
the competitiveness of miners
Definition of directions for increasing financing of miners'
competitiveness
Approbation and theoretical assessment of the developed concepts
and models for increasing financial support for the mining industry's
competitiveness
Formation of a long-term strategy for financing the development of
the human resources potential in the mining industry
Fig. 1. Main stages of financial support for the competitiveness of mining workers
We believe that the proposed comprehensive methodological approach towards
financial support for the competitiveness of mining workers will help identify its most
important components and develop effective measures for their improvement.
In our opinion, the most significant of the above components is the financial support
of the scientific and practical processes of determining the criteria for the
competitiveness of miners and conducting its sociological assessment. Thus,
appropriate funding allowed us to conduct monographic surveys to determine the main
features and characteristics of the competitiveness of miners (Table 1).
Thus, the results of the above-mentioned sociological assessment of managers and
employees of mining companies are different. Most managers and their deputies have
set rather high requirements for the qualitative parameters of financial controllers and
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their work activities, namely: professional qualification level, work experience, gender,
sense of responsibility, lack of bad habits, health status, family status and composition.
This is evidenced by the high average mark – 41.8 and the level of compliance with all
the maximum possible parameters – 83.6%.
Table 1. Assessment of the main features and characteristics of the competitiveness of the
mining industry enterprises of Donetsk, Lugansk, Zaporizhzhya, Kharkiv, Dnipropetrovsk,
Lviv, Volyn and Zakarpattia Regions, points.
Managers and their Hired
Feature, characteristic Average
deputies workers
Requirements for conditions and
20 50 35.0
remuneration
Education 30 20 25.0
Professional qualification level 50 30 40.0
Experience 50 20 35.0
Gender 50 10 30.0
Age 30 20 25.0
Sense of responsibility 50 30 40.0
Lack of bad habits 50 35 42.5
Computer skills 40 35 37.5
Health status 50 50 50.0
Family status, composition 40 30 35.0
Average points of feature, characteristic 41.8 30.0 35.9
Compliance with all possible parameters, % 83.6 60.0 71.8
A more detailed analysis of the requirements of managers and their deputies
contributed to identifying the priorities of this group of respondents regarding the
requirements towards the applicant most appropriate for the position, whom they would
prefer to employ in mining companies. In their opinion, this should be a male person,
aged 18-40, with a professional qualification corresponding to the workplace, with or
without work experience for this position for at least 5 years (for simple, unskilled and
predominantly manual labor), who is responsible for fulfilling their duties and does not
have bad habits (alcoholism, drug addiction, smoking). Thus, these qualities were
evaluated by the respondents mentioned above with the maximum number of points.
At the same time, heads of companies and structural units would like the applicant for
the position have appropriate education and computer skills.
However, the requirements of hired workers of mining companies for
competitiveness are much lower than those of managers and their deputies. For miners
employed in non-executive positions, the following features are among the priorities
for competitiveness: production conditions and value of labor are expressed by the level
of remuneration, health status, age, marital status and family composition, etc. (average
30).
We believe that this situation reflects the relationship between the complexity of the
work performed and the qualifications of its direct performers. As a result,
differentiated requirements of employers and employees towards the characteristics of
competitiveness of the latter are formed. So, if the work is predominantly typical,
450
manual, or mechanized, but involves material liability, then it requires, first of all,
greater physical effort. Therefore, the requirements are higher for health, conditions
and wages, and much less for the skills of work with computers, gender, education, etc.
However, in real life, hired workers may not always meet the criteria of employers,
which adversely affects the level of their competitiveness, because it depends on the
influence of many factors.
In order to avoid disparity between the preferences of the above-mentioned
respondent groups, it is necessary, in our opinion, to formulate leading components of
the financial support for the competitiveness of the mining industry and determine the
ways to increase the financing of the competitiveness of miners (Table 2). That means,
the most important components and directions for financing to improve the
competitiveness of miners are based on the implementation of measures for the
preservation of human resources and their development in the short and long term.
Thus, this approach envisages, above all, the following measures: financing of
competitions concerning employment of miners according to clear criteria; financing
of professional training and professional development of miners; financing of complex
programs for employment, career growth and personnel rotation of specialists of all
levels; financing of complex programs for the formation of the personnel reserve of
miners according to their professional qualification and professional direction, etc.
Table 2. Leading components and directions for increasing the financial support of the
competitiveness of mining workers in certain regions of Ukraine at macro and micro levels
Macro Micro
No. Component, direction
level level
Funding of competitions for miners’ employment according to clear criteria
Financing of leading scientific and practical specialists for the development
1. and implementation of specific and relevant criteria for the selection and - +
employment of miners.
Financing of professional training and professional development of miners
Financing of higher and vocational education by prospective specialists of
2. + +
the mining industry according to the needs of the labor market
Financing of competitive projects to attract the most capable and active
3. + +
youth to work in the mining industry.
Financing of complex programs for employment, career growth and personnel rotation of
specialists of all levels
Material incentives for miners working efficiently and effectively, taking
4. into account their organizational and professional abilities, including - +
prospect of their career growth.
Financing of complex programs for the formation of a personnel reserve of miners according
to their professional qualification and professional direction
Material incentives for the most promising future and current young
specialists in every work direction within the mining industry, promotion
5. of their professional development, improvement of their professional and - +
organizational skills and abilities and the possible assignment of each of
them to the position at any time
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In our opinion, the aforementioned approach will be conducive to the differentiation
at the macro and micro levels of influence levers on employment, income, employment,
conditions and attitudes towards labor and competitiveness under the market conditions
of future and current professionals in the mining industry.
Additionally, the effectiveness of the implementation of all the above measures
depends on the approbation and the theoretical assessment of the developed concepts
and models for increasing financial support measures for the competitiveness of the
mining industry. This approach involves the implementation of certain interrelated
stages (Fig. 2).
APPROBATION AND THEORETICAL EVALUATION OF CONCEPTS
AND MODELS FOR THE IMPROVEMENT OF FINANCIAL
SUPPORT OF COMPETITIVENESS OF MINERS
Definition and adaptation of scientific and practical developments with respect
to the evaluation of concepts and models for increasing financial support
measures of miners' competitiveness
Conducting monographic surveys of various social, age, gender and
professional groups of miners regarding certain measures to increase their
competitiveness
Characterisation of individual competitiveness criteria of workers in the
mining industry
Determination of the most important and relevant features and characteristics
of the competitiveness of the mining industry
Development of proposals for the long-term development of labor potential of
the mining industry with its direct adaptation to the labor market
Fig. 2. The main stages of testing and theoretical assessment of concepts and models for
increasing of financial support measures for the competitiveness of mining workers
Thus, the aforementioned approach involves a profound elaboration of theoretical
concepts regarding the financing of human resources development in the mining
industry and their effective practical implementation. At the same time, their
application should help identify the most important components for improving the
competitiveness of miners who need to improve, or to identify and finance the
development of new ones.
In our opinion, the formation of a long-term strategy for financing the development
of human resources capacity of the mining industry is an equally important stage in
providing financial support towards miners' competitiveness. Thus, it should ensure the
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implementation of the following measures at the expense of public and private
institutions at the macro and micro levels:
─ financing the development and implementation of a comprehensive state program of
employment of depressed regions and unprofitable sectors of the economy
(identification of priority areas for training, and retraining of future and current
workers in the mining industry);
─ financing of the employment system by the state or private mining companies (with
partially jobs guaranteed by the state) (allocation of state funds for employment of
the population in the relevant economic entities);
─ financing and formation of a state order for the training of future mining specialists,
taking into account the state and prospects of the labor market in this area (reduction
of ineffective state expenditures for the training of specialists for which there is no
demand in the labor market and directing these funds towards support of
employment and increase of incomes of mining employees);
─ financing the improvement of qualification of miners in modern domestic and
foreign technologically equipped enterprises, institutions and organizations
(competitive selection of the best experts in the mining industry and payment of their
internships in the respective economic entities);
─ financing of the system of re-training of workers in the mining industry in relation
to this field (related to this field may be any specialisation related to work in heavy
industry and the processing industry);
─ financing a program of employment of disabled people with occupational diseases
obtained as a result of work in this area (preferential taxation of economic entities
employing this category of population);
─ privileged income taxation for employees of unprofitable mining companies
(granting of tax privileges on personal income, a single social contribution, value
added tax, corporate income tax, etc.), etc.
We believe that all the above measures will not only increase the competitiveness of
the miners, but will also contribute to their effective employment in this area and the
improvement of welfare in general. They can also be used as proposals for the effective
implementation of financial support measures for the competitiveness of mining
workers.
5 Conclusion
Thus, as a result of the analysis, we have established that the competitiveness of an
employee of the mining industry implies his ability to fully exercise his right to work
in an economic entity of the industry and receive an appropriate remuneration for it at
any time.
Taking into account the aforementioned interpretation, we have identified the main
stages of the financial provision of the competitiveness of the mining industry. They
foresee: financial support of the scientific and practical process of determining the
criteria for competitiveness of miners and conducting its sociological assessment;
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formation of the leading components of financial support for the competitiveness of
workers in the mining industry; definition of directions for increasing financing of
miners' competitiveness; approbation and theoretical assessment of the developed
concepts and models of increasing the financial support measures of the mining
industry's competitiveness; formation of a long-term strategy for financing the
development of the human resources potential of the mining industry.
However, as a result of the monographic survey, we have established that there is a
significant disparity between individual groups of respondents regarding the
implementation of the above-mentioned stages. Thus, the activities of the heads of the
mining enterprises and their deputies are aimed at minimizing the costs of human
resources, while hired workers prefer to secure their own welfare at the expense of
employers.
In order to avoid the above disparity, we have identified measures to increase the
competitiveness of miners. They provide financial support for the implementation of
professionally oriented personnel policies by employers for hired workers, periodically
assessing the quality of work of each miner and providing them with appropriate
material and socio-psychological incentives.
The above-mentioned approach will promote a higher level of competitiveness,
employment and income of miners, as well as complex development of human
resources potential of enterprises of the mining industry as a whole.
Further scientific research will examine the results of the application of the described
stochastic positional model and the complex methodological approach to financial
support for the competitiveness of mining workers at enterprises and substantiated the
use of recommendations for the formation of a long-term strategy, including the
application of preferential taxation of profits for workers of non-profit mining
companies.
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