RBK Daily: Unpaid Wages Accumulating

Below is another exclusive translation from the Russian news outlet RBK Daily, a pro-government source that sometimes serves as an unintentionally illuminating guide to Kremlin thinking.  This piece of news, which has also been hit by the Journal, is rather more straightforward.


For labor they have stopped paying

Wage arrears are growing in Russia

Yesterday Rosstat published alarming data about wage arrears. In October they increased all at once by 33.4% compared with last years, to 4 bln rub. The arrears were to 300 thsd. persons, nearly half of them (43%) — workers in manufacturing. The main reason for the delinquencies — non-payments between enterprises and inaccessibility of credits. The anti-crisis measures of the government are lagging behind, state experts. Even if the adopted decisions work, the effect will manifest itself only in several months.

A large part of the arrears (94.6%) is formed due to the absence ofown funds at organizations. Arrears due to untimely receipt of moneyfrom budgets of all levels grew by 11.4%. In the overall volume ofoverdue indebtedness 38% comes to manufacturing and 12%a — toagriculture.

The scale of the problem compared with the labor remuneration fundis for now not great: on average the delinquency comprises for nowaround 1% of it, however the tempos of growth of the debts are great.”Statistics smooth over the real situation: the problem began to becomeacute from the second half of October. Therefore it is fairer to saythat not over a month did the arrears increase by more than a third,but over half a month”, — comments FBK partner Igor Nikolayev. Arrearsfor October, according to the data of statistics, in the overall volumeof delinquent payments comprised 49% on average: in the constructionindustry — 73%, in the sphere of culture — 64%, on transport — 50%, inagriculture — 32%, health care — 22%, education — 21%.

“The growth of delays is connected with the non-payments ofenterprises”, — comments leading expert of the Center for MacroeconomicAnalysis and Short-Term Forecasting Igor Polyakov. Until October, thearrears were moderate, they were connected with the fact that certainenterprises were settling by barter. November, in his opinion, willdemonstrate another 15–20-percent increase in arrears. In December theproblem will not be as evident: at the end of the year traditionallythe state budget settles with the commercial sector for servicesrendered.

The first quarter of the year 2009 will be complex formanufacturing, construction, export trade, agriculture, forecasts Mr.Polyakov. He is confident only in the solvency of the state sector: thebudget in the year 2009 will have enough funds for timely settlements.”The tendency of growth of arrears has entrenched itself for the nextfew months, — agrees Mr. Nikolayev. — Further on everything will dependon how successful the government’s anti-crisis measures turn out to be”.

The most important of them have yet to be adopted: approved is justthe plan for law-drafting activity. According to the plan, manymeasures with respect to state guarantees, imperative for overcomingthe non-payments crisis, will be adopted no earlier than the spring ofthe year 2009.

Unlike the non-payments crisis of the 90s, an employee is now moreinsured from “free” work: there is a law in effect that establishes theadministrative liability of the employer for a delay in wages. True,the fines envisaged by the law are not great: for non-payment in excessof two months they comprise up to 120 thsd. rub., if the non-paymentshave led to grave consequences — up to 500 thsd.

An employer has not a few ploys in order to “lawfully” reduce hispayments. For example, to deprive employees of an important componentof wages — bonuses, which often comprise more than 50% of the salaryand are not spelled out in the labor contract, notes director formarketing and PR of the HeadHunter group of companies Olga Brukovskaya.Employees can also be sent on unpaid leave.