By Renfrey Clarke
MOSCOW — By the standards of most countries in most epochs, the Russian government, led for almost two years by Prime Minister Viktor Chernomyrdin, should have perished long ago. It has survived largely by resorting to a policy which Western rulers normally condemn as suicidal — permitting the share of wealth going to consumption to rise steadily, at the cost of a drastic slump in productive investment.
Other key factors have included the exhaustion and political confusion of the working masses, together with the programmatic barrenness of all but small groups within the organised opposition.
The nature of the Russian labour market has not, perhaps, been the central factor preventing any major showdown between workers and the government. But it is an important factor nonetheless. Labour power is bought and sold here on the basis of an unstable, half-formed procedure which combines elements from both the old bureaucratic-paternalist system and the new "feral capitalism". This has provided the authorities with considerable scope for defusing social antagonisms and deflecting unrest.
The drawback is that the antagonisms have not been resolved — merely forced underground, to emerge in new and more explosive forms at a later date.
The paradoxes of the labour market are illustrated by the fact that while industrial output in July was down by almost 30% from a year earlier, only 1.5% of workers have reportedly been laid off this year.
Unemployment remains moderate by world standards. Confusion has surrounded the actual level, since the Federal Employment Service uses eccentric statistical methods to come up with a figure of just 1.6%. The State Committee on Statistics, using the methodology of the International Labor Organisation, reports a level of 6% out of work and actively seeking jobs.
The combination of collapsing production with minimal lay-offs suggests that many people are clocking on for work but are being given virtually nothing to do. And indeed, labour productivity has fallen dramatically over the years of "reform". But large numbers of workers are also suffering from intermittent stand-downs. At any one time, about 3.5% of the work force are on forced leave, and a further 2.5% are working a short week.
Delayed wages
A related situation applies with wages. Where enterprises keep large numbers of semi-redundant workers on their payrolls, they are likely to make up for it by paying them only after lengthy delays. Only about 40% of enterprises have a solid record of paying wages on time. At any particular moment, more than 20% of workers have not been paid for the last month — and in some cases for three, four or even five months. Unpaid wages are not usually indexed for inflation, adding to the savings for employers.
It would be wrong to say that workers have accepted this situation without protest. Delays in the payment of wages were among the main causes of a dramatic increase in strikes during the first half of this year.
But in relative terms, the number of participants in these actions has been tiny. In many cases strike action would clearly be futile, since enterprises obviously cannot pay — they are among the victims of a chain of debt non-payments stretching back to the government, itself one of the worst offenders in failing to meet its wage bills.
Even where workers have not been paid for months, they are usually reluctant to quit. Often, this is because there is no other work available — in many Russian cities, there are only one or two major employers. In addition, workers are often dependent on their employers for housing and health care.
If workers are slow to leave jobs of their own accord, employers are rarely in a hurry to sack them. Severance pay entitlements are high, and tax laws encourage enterprises to employ large numbers of low-paid workers rather than smaller numbers of better-paid, more productive ones. Employers who pay wages above set levels are hit with punitive taxes.
The advantages for the government are obvious. Levels of outright unemployment are kept relatively low, and politically traumatic mass sackings are generally avoided. As traditional sources of employment decline, workers have the option — painful, but often bearable — of deciding for themselves to move into the expanding market-oriented sectors of the new economy.
So far, the large-scale destruction of industry and science has passed off with astonishingly little social conflict. Supporters of the government have noted with satisfaction the flow of workers into new, quintessentially capitalist sectors. The English-language Moscow Times reported during August: "While employment in manufacturing fell by 8.7% and in science and scientific services by 13%, employment in finance and insurance grew 7.3% last year".
Bankruptcies
The government is taking its time implementing the harsh "restructuring" policies demanded by international lending agencies. Earlier, predictions abounded that the present autumn would bring a wave of bankruptcies and mass sackings, with thousands of insolvent enterprises shut down or forcibly reorganised. But as of late August, only about 100 enterprises, most of them small, had had bankruptcy proceedings brought against them. There are few signs that the pace of "restructuring" will rise abruptly in the next two or three months.
However, there are limits to the government's ability to avoid unrest by using the paternalist methods of the past. One sign of the problems of this strategy is the fact that the once-gradual rise in open unemployment has begun to accelerate. In particular areas of Russia, joblessness has now reached catastrophic levels.
The Federal Employment Service, whose figures record only the minority of the jobless who have registered at employment offices, reported at the end of August that the number of people on its books had risen by 50% since January. Chronic unemployment is becoming widespread. The average period of registered unemployment, which at the beginning of 1993 was three months, is now six months.
In Ingushetia, in the economically backward north Caucasus, registered unemployed now outnumber job vacancies by 197 to 1. In Ivanovo province, where the textile industry has collapsed, this figure is 74 to 1, and there are many other regions where it is 25-35 to 1. President Boris Yeltsin's representative in Ivanovo recently estimated real unemployment in the area at 20%. In regions such as this, the conditions are already present for the rise of large, militant opposition movements.
If concern for political stability has encouraged the government to put off forcing a wave of bankruptcies, the condition of state finances is now placing strong pressure on the authorities to speed up this same process.
During the first half of this year, federal revenues fell 36% short of budget estimates for the period. The government is now scrutinising its industry policies, looking for ways to make savings. The remaining subsidies and cheap credits available to loss-making enterprises are likely to be dropped. Moves will be initiated to change provisions that discourage sackings.
During the autumn, thousands of less viable enterprises will be pushed off their present financial knife-edge. Nothing works quickly in the Russian legal system, and bankruptcy proceedings are unlikely to be brought and to take effect in large numbers until well into next year. But the technicalities are not the important thing.
As the months pass, late payment of wages for millions of workers will turn into non-payment. For many workers who are not sacked outright, weeks of undesired leisure will turn into months. While still formally in employment, these workers will be forced to hunt for jobs and wages in a heavily over-saturated labour market.
The jobs scene will come increasingly to resemble what exists in most of the capitalist world — that is, the Third World. Skilled workers employed in knowledge-intensive industries will in time make up no more than a small minority. Large numbers of workers will have to accept unchallenging, insecure and usually low-paid jobs in a bloated sector of petty sales and services. Much of this will be the sub-employment endured by people such as street pedlars and boot-blacks.
The main difference with countries of the Third World is likely to be the relatively small number of Russian workers in low-wage light manufacturing jobs. Light industry continues to shrink, devastated by weak domestic demand and competition from cheap imports favoured by the government's exchange rate policies.
Open unemployment in coming years is likely to stand at typical Third World levels of 15-20% or worse. To a disproportionate degree, the jobless will be recent college graduates and other young people for whom socialism was a golden childhood, while capitalism is represented by the poverty and hopelessness of the present. Chernomyrdin's chances of lasting another two years as prime minister do not seem bright.