16 February 2003 15:55
Russian cabinet taking active approach in labour policy - paper
Social provision has been improved through the regular payment of unemployment benefit and this has provided a
greater incentive to register, a Russian paper has said. This led to a rise of 200,000 in the number of
officially-registered unemployed in 2001-2002. However, policy is still muddled and requires more work. This is
evidenced by a recent move to cut over one trillion rubles worth of unfunded social commitments at federal and regional
level which foundered due to confusion over tax and spending jurisdictions, the paper said. It also expressed alarm at
an apparent warning from a visiting IMF team that the cabinet should slow down the pace of tax reform. The following is
the text of the article published in the Russian newspaper Kommersant on 14 February; subheadings as published:
Yesterday [13 February] the head of the government, Mikhail Kasyanov, held a government session to discuss government
policy in the labour market and inter-budgetary relations. It was decided to increase employment and the employability
of the able-bodied population, regulate labour migration and rewrite the budget and tax codes. The premier immediately
reported the decisions to President Vladimir Putin.
Unemployment as a lifestyle
"It's good that unemployment has risen over the last two years!" was the sensational opening to Labour
Minister Aleksandr Pochinok's report. "This means that unemployed people are officially registering
increasingly more often!" he said, immediately wiping away his colleagues' perplexed smiles. It transpired
that the minister was primarily praising unemployed Chechens. According to his ministry's data, 190,000 jobseekers
have registered in the republic in the last two years (how many of them are seeking work with a weapon in hand is not a
question for the Labour Ministry). Incidentally, the number of officially registered unemployed throughout Russia
increased by exactly 200,000 in 2001-2002.
However, it is indeed becoming increasingly advantageous for unemployed people to register. First, unemployment
benefit has recently begun to be paid regularly everywhere and, second, its size has increased substantially. According
to Aleksandr Pochinok, the minimum rate is 20 per cent of the subsistence minimum in the region and the maximum rate is
30 per cent of the claimant's former wage. As a result, in a number of regions it is becoming almost a prestigious
occupation to be unemployed. Especially as nobody wants the overwhelming majority of Russian working people because of
their extremely poor skills.
According to the Labour Ministry, in Russia only 5 per cent of working people have a high skill level, whereas the
figure in the USA in 43 per cent and in Germany 56 per cent. It is not surprising that in most Russian regions the
number of vacancies exceeds the number of unemployed people. More and more unemployed people want to remain so forever.
For instance, Altay Territory governor Aleksandr Surikov noted bitterly that his peasants are registering by hook or by
crook as having lost their jobs and are receiving benefit, but meanwhile are also feeding themselves from their private
plots.
In general, not even the development of small business, which was particularly emphasized yesterday by Labour
Minister Pochinok and Yaroslavl governor Anatoliy Lisitsyn, will be a help here. Tomsk governor Viktor Kress proposed a
radical prescription for treating the unemployed. "A significant role in the fight against unemployment could be
played by wild plants!" he declared sternly. "What are those?!" the premier asked, dumbfounded.
"Berries and mushrooms!" the governor replied with dignity. "People come to Siberia for them even all the
way from Germany." (Let us note that in several Russian regions the mushroom business is one of the most
crime-ridden sectors - the Germans pay big money for chanterelles and ceps.) While ministers were memorizing the new
term, the Tomsk governor continued: "In the cities we have opened student business incubators. We must create
incentives to seek work. Parasitic sentiments are in the Russian people's genes!"
But the premier resolutely rejected governor Kress's prescription: "The unemployment problem cannot be
solved by picking mushrooms." And he added thoughtfully: "I don't believe in special Russian
genes."
Mikhail Shmakov, chairman of the Federation of Independent Trade Unions of Russia, immediately suggested that trade
unions be involved in drawing up quotas for labour migrants (foreigners do not pay trade union dues). He then
unexpectedly said that "everyone who officially gets R2,000 a month is either concealing other sources of income or
else is employed in the 'grey' economy". Aleksandr Pochinok responded by saying that migrants must be
supplied with legal documents as quickly as possible. For their own benefit.
Deputy Prime Minister Aleksey Kudrin, perplexed and evidently having lost the thread of the discussion, asked the
premier: "I don't understand the point of creating jobs. Is it a social task or to increase the efficiency of
the economy?" The premier explained: "It is a question of efficient sectors of the economy." Economic
Development Minister German Gref hastened to add: "New jobs will not be created at the expense of GDP. But there is
a need for a state order for the training of highly skilled personnel."
There will be fewer mandates
The government moved on to discuss the problem of so-called unfunded mandates. In other words, social commitments by
the federal and regional authorities for which money is not earmarked in the appropriate budgets. According to the
calculations of First Deputy Finance Minister Tatyana Golikova, totally unsupported commitments by the federal centre
and the regions have reached 8 per cent of GDP. It was decided to surgically remove such commitments. In 2001, 87
federal laws to the tune of R530bn were rescinded and in 2002 some 120 to the tune of R380bn were rescinded. This year
Mrs Golikova suggested eliminating 97 unfunded mandates totalling R1,368,000,000,000. The lion's share - R830bn -
is to be sacrificed by regional authorities rather than federal authorities.
But a snag emerged at this point. The present Budget Code does not clearly specify who is responsible for funding
particular social benefits. "For instance," Tatyana Golikova asked her colleagues, "which level of power
is responsible for free travel on public transport?" Opinions were divided. It is apparently the federal government
that funds the army, but it the regional authorities which lose revenue due to people in uniform travelling for free. It
was impossible to find a solution to this financial conundrum. We need to change the budget and tax codes and carefully
stipulate in them which taxes are assigned to which levels of power and which commitments can be funded from them.
However, it transpired that the codes cannot be changed straightaway. We must wait for the State Duma to adopt the laws
on local self-government prepared by Deputy Chief of Presidential Staff Dmitriy Kozak's group.
After the government session the premier went to see the president in order to report on its results and also on the
socioeconomic situation in the country in general. Naturally, they also discussed the new medium-term programme (for
2003-2005). As Kommersant wrote on 6 February, this is a more ambitious document than the current programme (although a
considerable proportion of its indicators have not been achieved). According to unofficial information, Vladimir Putin
was happy with the government's new plans.
Incidentally, the IMF mission that completed its work in Moscow yesterday also expressed cautious approval of the
government's policy. The mission has already handed its report to First Deputy Finance Minister Aleksey Ulyukayev.
According to him, the members of the mission particularly liked the fact that the Russian government is continuing to
pursue a tough credit and monetary policy and budget policy. The members of the mission also liked the new government
version of the law on currency regulation. As a result "Russia has posted stable growth in GDP and a considerable
current balance of payments surplus for four years running and a budget surplus for three years running". However,
the IMF is worried that, "despite the favourable conditions arising from the preservation of stable prices of
energy resources, there are signs of a slowdown in growth rates". In particular, important structural reforms have
been postponed, including in the gas sector and the power industry. The IMF mission particularly recommended
accelerating banking reform. As for tax reform, Mr Ulyukayev claimed that members of the mission warned in a
conversation with him that it is proceeding too quickly.
According to the Government Information Department, the Russian government is using IMF recommendations, in
particular, in finalizing the new medium-term programme to be discussed at the next cabinet session on 20 February.
Which is slightly alarming. What if it heeds the mission's view that tax reform should be slowed down? Especially
as the Finance Ministry is clearly not opposed to this.
[Kommersant] |
RUSSIA IN FACTS
