Russia » Economics
Author`s name Michael Simpson

Wages Just a Dream in Russia

Mass back wages as a factor of Russia's economic growth
The Russian State Statistics Committee and the RF Government are always good at praising each other. However, the Statistics Committee is not at all embarrassed with the fact that the official statistics they regularly publish seriously disagrees with the reality. In fact, unlike majority of Russians, officials of the Committee are paid their wages duly, no matter what the results of their calculations are. This is astonishing that high-ranking governmental officials say they are satisfied with the situation in the country. But the present-day situation in the country is such that it's time for majority of the officials to think about resignation.

What is the recent information published by the RF Statistics Committee? The Committee once again has published a report on arrears of wages in Russia. It is seen from the report, the arrears of wages within the period of August 1 - September 1 reduced by 5.1 per cent, and they reduced by 9.6 per cent since September 1, 2002. But at the same time the total backpay volume in Russia is huge and makes up 723 billion rubles. 25,205 billion rubles of the sum fall at the industrial sector (following the president, Duma officials are now widely discussing the problem of industry reviving); 4,705 billion rubles of the sum make up the arrears of wages to workers of the social sector and 813 million rubles - the backpay to other economic sectors.

Year after year the RF Statistics Committee reports that a basic part of the debt (27,757 billion rubles) is the debt that has arisen because organizations don't have internal funds. In other words, it is said that even though people do work, they produce something and carry out their economic and social functions but there is no money to pay wages to them. Otherwise this money has been spent on something more important. This is strange but these people continue working. Are they afraid of turning into unemployed or is this the strange peculiarity of the Russian mentality?

According to the RF Statistics Committee, enterprises and organizations still have no money to pay wages to their workers. As the Committee's reports say, Russia's eternal financial problem - under-financing - is the key reason why organizations have no money. It is reported that in general the under-financing is reducing; however it would be better to liquidate it once and for all. At the same time, this is highly likely that at the end of the year the Ministry of Finance will proudly report wonderful performance of the budget. There certainly will be less pathos about budget performance in Russia's regions. For several years already the Ministry of Finance has been speaking about the necessity to introduce external control over bankrupt regions of the country. But the intention still remains unrealized. In fact, if the ministry introduces this measure in the regions it is highly likely that the procedure will demonstrate that regions become bankrupt because of the ministry's direct actions. Indeed, the Ministry of Finance deprives the regions of majority of taxes and dues, but forgets to appropriate important transfers in exchange. Thus, the Ministry of Finance turns out to be even less solvent than regional administrations.

This is the reason why the ministry headed by Alexey Kudrin likes to be particularly proud of its paper results and still blames the regions themselves for their problems. On September 15, Russia's Minister of Finance Alexey Kudrin told deputies at a session of the Duma Budgetary Committee that for the first time over the whole period of reforms started in February 1992 the arrears of wages to budget-related workers in Russian regions reduced to a record low showing of 300 million rubles (while the figure made up 1.2 - 1.3 billion rubles not long ago). The minister says this is due to the balance of the federation units' budgets. But the situation is quite obviously explained with the forthcoming elections: if the electorate has no money the people may ignore the elections. It's has become a proven practice that arrears of wages will be speedily increasing after the elections all over Russia.

If we look through reports of news agencies we'll see that the quietness of officials and the official statistics are false. The modern Russian press doesn't like to touch upon the outrageous fact that thousands of Russians continue working for free, under conditions of severe exploitation and the labor that is sometimes close to slavery. This often happens in this country that private employees and directors of budgetary organizations don't pay their workers for what they do. Mass violations of this kind won't happen in any of the civilized countries. Still, incidents connected with arrears of wages may occur in every country, but they are not regular there. The other day a Japanese man took hostages because he was outraged with three-month arrears of wages; the man set the office on fire and ruined the lives of innocent people. Can you imagine what teachers or doctors from Russia's province would do because of year-long arrears of wages if they chose the same way of solving the problem? In fact, the patience of Russian workers who are not paid their wages duly is not endless.

Workers organize protest actions in all parts of the country and demand that backpays must be settled. Workers of the municipal boiler-house in the city of Yeniseisk in Russia's Krasnoyarsk Region are on strike.

Krasnoyarsk Governor Anatoly Matyushenko explains the situation with arrears of wages this way. In summer, the administration was seriously getting ready for the heating season and spent wages of workers on this purpose. Does it mean that now the city has quite enough fuel? If it is so now it is quite a problem to make workers of the housing and communal sector use the fuel under condition that these people are not paid for what they do. The Yeniseisk administration promises to settle the backpay, but doesn't specify in what month exactly - October, November or December.  Still, officials say that the arrears of wages won't have any impact upon the start of the heating season.

The city of Vorkuta is experiencing a transport crisis because workers of the municipal transport enterprise are on strike. Two thirds of the city public transport is out of operation now; 59 workers of the transport enterprise refuse to go to work, six of them have been on a hunger strike since September 2. Vorkuta Mayor Igor Shpektor offered a compromise: the administration pays 4.5 million rubles to settle part of the arrears of wages; the administration promises to pay the rest of the debt later. But the strikers won't accept the terms of the mayor. They demand that the whole of the backpay must be settled at once. Workers of the transport enterprise even sent letters to the city prosecutor’s office, to the RF Prosecutor’s Office and to President Vladimir Putin. No response came from any of the authorities.

The situation is that difficult in other regions of the country as well. According to the Minister of Labor and Social Development in the republic of Karelia Nikolay Chernenko, the arrears of wages at industrial enterprises of the republic make up 81 million rubles.

A special commission was set up in the local administration in Russia's Lipetsk Region to deal with settlement of arrears of wages and with violation of workers' rights. The commission developed a strict schedule for settlement of backpays.

Is this possible that economic achievements of Russia that are reported by government ministers and vice-premiers are based on the simple fact that those who work for increase of the GDP are not paid their wages? This is a really serious problem against the background of President Putin's appeal to double the GDP.

Photo: the note at the window where workers get their wages says "No Money"

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